Issue oversubscribed in 5 days; infrastructure co to retain green-shoe option

India Infrastructure Finance Company Ltd’s public issue of tax-free bonds received thumbs up from investors, especially the retail ones.

In just five days after its launch, the bond offering, with an issue size of Rs 500 crore, has been oversubscribed, Harsh Kumar Bhanwala, Acting Chairman and Managing Director, IIFCL, told Business Line here.

The strong response from retain investors comes on the back of higher coupon rate and brokerage fees paid , Bhanwala added.

In a public issue of tax-free bonds, 40 per cent of the issue is earmarked for retail investors.

Encouraging response

He said till Tuesday investors had subscribed to bonds worth Rs 582 crore, with retail investors alone putting in Rs 210 crore. Unlike last year, when retail investors showed lukewarm appetite for such bonds, there has been an encouraging response this year.

IIFCL is offering 8.26 per cent, 8.63 per cent and 8.75 per cent interest for the 10-, 15- and 20-year bonds, respectively.

The Reserve Bank of India’s recent move to lower the marginal standing facility rate by 50 basis points also helped IIFCL, as it somewhat lowered the yield on Government securities on Tuesday, prompting investors to lock into higher returns.

The current issue of tax-free bonds will remain open till the green shoe option of Rs 2,000 crore is garnered, Bhanwala said.

The Central Board of Direct Taxes had given its nod for IIFCL to mobilise Rs 10,000 crore through tax-free bonds this fiscal, of which IIFCL had mobilised Rs 2,963 crore through private placement.

IIFCL is looking to mobilise Rs 2,500 crore through the first tranche of the public issue. The balance Rs 4,500 crore will be mobilised in two tranches, Bhanwala said. The next two tranches are slated for November and January 2014. .

srivats.kr@thehindu.co.in .

(This article was published on October 9, 2013)
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