Tata Capital's Rs500 crore NCD issue to open on 2 February

Tata Capital, the financial services arm of the Tata Group, plans to raise Rs500 crore through an issue of non-convertible debentures.

The five-year debentures, which will open for subscription on 2 February, will have the option of retaining over-subscription of additional Rs1,000 crore.

Proceeds of the issue will be used to fund the company's various financing activities, including lending and investments, repaying existing loans and business operations, among others, Tata Capital's managing director and CEO Pravin Kadle said.

Kale said the issue may close earlier, depending on the response and the company might even consider buyback of NCDs from time to time depending on the market conditions.

Allotment of over-subscription to the NCDs, which have varied put and call options, would be on a first-come-first-served basis, he said.

Tata Capital would offer 12 per cent interest on the annual and cumulative interest payment options and 11.25 per cent for those opting for quarterly interest payment, which would have an annual yield of 11.73 per cent.

ICICI Securities, Citigroup Global Markets India and DSP Merrill Lynch are the lead managers for the issue, while Tata Capital Markets would act as the advisor to the issue.

Tata Capital has an asset base of Rs6,828 crore as of September 2008, up from Rs3,329 crore in March the same year. It had a capital adequacy ratio of 26 per cent as of September 2008.