IIFCL targets Rs 9,215 cr through tax-free bonds

New Delhi: State-owned India Infrastructure Finance Company Ltd (IIFCL) today said it plans to raise up to Rs 9,215 cr through tax-free bonds to fund infrastructure projects in the country.

"We plan to raise Rs 1,500 crore with green-shoe option up to the shelf limit of Rs 9,215 crore on first-come first-serve basis," IIFCL chairman and managing director SK Goel said in New Delhi.

Tax-free bonds in the offing. Andrew Middleton/Flickr

These funds will be utilised to provide long-term funding to PPP projects in the sectors like power, infrastructure, etc.," he said.

There will not be any tax implication at the time of investment in these bonds while interest earned from the bonds is tax free.

Investors have an option to invest for 10 years, 15 years and 20 years and the bonds with no-lock in period would be listed at the BSE.

The minimum amount of application is Rs 5,000 with face value of Rs 1,000 per bond.

Giving details of the bonds, Goel said retail investors will get 50 basis points higher return compared to other categories like qualified institutional buyer (QIB), High Networth Individuals (HNI) and corporates.

For retail investors, the bonds carry a coupon rate of 7.69 percent for 10 years, 7.86 percent for 15 years and 7.90 percent for 20 years, he said.

The coupon rate applicable for the other categories of investors shall be lower by 50 basis points 7.19 percent for 10 years and 7.36 percent for 15 years and 7.40 percent for 20 years.

The issue will open on 26 December and closes on 11 January.

As per the Budget proposal, IIFCL was allowed to raise Rs 10,000 crore from the tax-free bonds during 2012-13. Of this, it has raised Rs 785 crore from private placement.

Asked if IIFCL has requested government for allowing infrastructure financing institutions to raise funds through tax-saving bonds, he said, "It is always our wishlist to get access to cheaper sources of funds. It is up to the government to allow or not."

IIFCL has set a target of Rs 30,000 crore loan disbursement for this fiscal.

"We have already done around Rs 26,000 crore disbursement. We are on the right path and comfortable to achieve our target by 31 March," Goel added.


Updated Date: Dec 20, 2014 20:44 PM

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