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To build up a diversified investor base, Andhra Bank is planning to issue infrastructure bonds not just for institutional investors but also for retail investors.
While the Hyderabad-headquartered public sector bank is actively considering private placement of infrastructure bonds, its Chairman and Managing Director CVR Rajendran said an issue of such bonds for retail investors is also in the works.
The bank is currently talking to investors for an infrastructure bond issue aggregating ₹1,000 crore. The bonds will be of 7-10-year duration and the coupon rate being quoted is around 9.30 per cent. Rajendran said his bank will seek the central bank’s permission to issue infrastructure bonds to retail investors.
“The subscription for infrastructure bonds for institutional investors usually closes in a day. But for retail investors, the subscription period has to be kept open for a longer period,” he said.
Rajendran said his bank is making efforts to reduce the geographical concentration in business. Currently, 52 per cent of its business comes from Andhra Pradesh (AP) and Telangana.
To address this issue, Andhra Bank, in the current financial year, opened seven of its nine new zonal offices outside AP and Telangana.
The bank plans to open about 100 branches in each of the new zones. By doing so, in three years, it expects the AP and Telangana business to come down to 35 per cent of the total business.
Rajendran clarified that the bank will not be slowing down its business in AP and Telangana. It is only that business will be growing faster in new zones.
Sale of assetsA senior official said the bank has sold its ₹170-crore loan exposure to Bharati Shipyard at a haircut (reduced market value) to an asset reconstruction company (ARC). The company’s debt restructuring has not made much headway.
Rajendran said the bank prefers recovering bad loans on its own rather than selling them to ARCs.
However, only in the case of consortium loans does the bank go with the lead bank’s decision to sell loans.
Saleability of assets in the infrastructure space has improved and borrowers are coming forward to sell their core as well as non-core assets to de-leverage their balance sheets, said Rajendran.
In this regard, he said that 80 per cent of the infrastructure companies in the country are from Andhra Pradesh and they could benefit.
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