L&T Finance, a fully-owned unit of Indian engineering conglomerate Larsen & Toubro, is planning to raise Rs 500 crore through an issue of non convertible debentures this month. The issue this time comes with a shorter maturity of three years.

The issue opens and closes on February 22 and offers 8.5 per cent interest per annum. Seeing the good demand from high net worth individuals the last time around, nearly 15 per cent of the institutional category will be reserved for individual investors.

L&T Finance raised Rs 1000 crore in September last year. The company plans to utilise the funds raised from NCDs for lending, investments, repaying existing high cost loans and for capital expenditure and working capital requirements.

"Instead of raising money from a bank or mutual fund, we are using this route. Given the pricing and other alternative investments in the market the response should be good for us," said N Sivaman, senior vice president – financial services at L&T.

This time around too experts see good response for the L&T NCD issue, even from retail investors, who are shifting to debt instruments given the volatility in equity markets.