IIFC to raise Rs 2400-cr in tax-free bonds
India Infrastructure Finance Company is planning to raise up to Rs 2,400 crore in private placement of tax-free bonds this week.
By ET Bureau | Updated:
KOLKATA: State-owned India Infrastructure Finance Company is planning to raise up to Rs 2,400 crore in private placement of tax-free bonds this week to meet immediate lending commitments, when most companies are keeping a safe distance from the market due to a sharp rise in borrowing cost in an uncertain market.
The provider of longterm finance to infrastructure projects is also lining up Rs 7,000 crore worth of retail bonds in October. “The market is volatile. But we have some immediate disbursement commitments,” IIFCL executive director Harsh Kumar Bhanwala told ET.
The company will issue taxfree bonds for 10, 15 and 20 years for raising a minimum Rs 100 crore with the right to retain oversubscription up to Rs 2,400 crore, it said in a note to investors. It plans to raise a total of Rs 3,000 crore in private placement this year in phases. The coupon will be finalised in book-building route.
On retail bond plans, Bhanwala is expecting investors to lap up the issue as interest rate will be higher and attractive. “This is the right time to hit the retail bond market from an investor’s point of view,” Bhanwala said.
IIFCL takes the average of two weeks of government security yields and subtracts 55 basis points (bps) to arrive at the coupon for retail sales. It fixes 70 bps lower coupon from the average for corporates. Bhanwala said the lender has about Rs 20,000 crore worth of sanctioned loans which will be due for disbursement in the next one-two years.
Moreover, the company will have return Rs 10,000 crore to investors by March 2014 for money raised five years ago. “There will be no problem in meeting the redemption. We have lined up funds for that,” said Bhanwala, who is officiating as chairman and managing director after SK Goel’s three-year term ended in June this year.
“We have also started working on plans to raise $500 million from overseas investors,” he said. The government has just allowed IIFCL, Indian Railway Finance Corp and Power Finance Corp to raise $4 billion between them in quasi-sovereign bonds to finance longterm infrastructure. IIFCL and PFC are allowed to raise $1.5 billion each, while IRFC will raise $1 billion.
The provider of longterm finance to infrastructure projects is also lining up Rs 7,000 crore worth of retail bonds in October. “The market is volatile. But we have some immediate disbursement commitments,” IIFCL executive director Harsh Kumar Bhanwala told ET.
The company will issue taxfree bonds for 10, 15 and 20 years for raising a minimum Rs 100 crore with the right to retain oversubscription up to Rs 2,400 crore, it said in a note to investors. It plans to raise a total of Rs 3,000 crore in private placement this year in phases. The coupon will be finalised in book-building route.
On retail bond plans, Bhanwala is expecting investors to lap up the issue as interest rate will be higher and attractive. “This is the right time to hit the retail bond market from an investor’s point of view,” Bhanwala said.
IIFCL takes the average of two weeks of government security yields and subtracts 55 basis points (bps) to arrive at the coupon for retail sales. It fixes 70 bps lower coupon from the average for corporates. Bhanwala said the lender has about Rs 20,000 crore worth of sanctioned loans which will be due for disbursement in the next one-two years.
Moreover, the company will have return Rs 10,000 crore to investors by March 2014 for money raised five years ago. “There will be no problem in meeting the redemption. We have lined up funds for that,” said Bhanwala, who is officiating as chairman and managing director after SK Goel’s three-year term ended in June this year.
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“We have also started working on plans to raise $500 million from overseas investors,” he said. The government has just allowed IIFCL, Indian Railway Finance Corp and Power Finance Corp to raise $4 billion between them in quasi-sovereign bonds to finance longterm infrastructure. IIFCL and PFC are allowed to raise $1.5 billion each, while IRFC will raise $1 billion.
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