Public sector entity India Infrastructure Finance Company (IIFCL) on Monday said it aims to raise around R9,215 crore via tax-free bonds to finance infrastructure projects in India.
IIFCL CMD SK Goel said the company would raise R1,500 crore with a green-shoe option (to accept over-subscription) up to the shelf limit of R9,215 crore on the first-come-first-serve basis.
In turn, these funds will be used for long-term financing of infrastructure projects that are coming up through the public-private partnership programme.
The issue, which opens on December 26, will close on January 11. Investors can stay invested in these bonds for 10 years, 15 years and 20 years. The bonds with no-lock in period would be listed at the BSE.
The minimum amount of application is R5,000 with face value of R1,000 per bond. There will not be any tax on the interest earned from these bonds.
Retail investors will earn 50-bps higher return on these bonds over other categories like high networth individuals (HNI), qualified institutional buyers (QIB) and corporates.
The coupon rates for retail investors are: 7.69% for 10 years, 7.86% (15 years) and 7.90% (20 years), while for other investor categories, they will be 50 bps lower — 7.19% (10years), 7.36% (15 years) and 7.40% (20 years). The then finance minister, Pranab Mukherjee, had said in his Union Budget 2012-13 speech that he proposes to double amount of the tax-free bonds from the 2011-12 level to R60,000 crore for financing infrastructure projects. That included R10,000 crore for IIFCL.
Of this R10,000 crore, IIFCL has raised R785 crore from private placement.
Asked if IIFCL has asked the government to permit infrastructure financing institutions to raise funds through tax-saving bonds, Goel said though it wanted access to more affordable sources of funds, it was the government's call whether to allow it. The company's loan disbursement target for this fiscal is R30,000 crore and it has already reached around R26,000 crore, Goel said.