HUDCO to raise up to Rs 4,810 cr via tax-free bonds

State-owned Housing and Urban Development Corporation (HUDCO) will hit market on September 17 to raise up to Rs 4,810 crore through public issue of tax free bonds.

HUDCO will use the proceeds for lending to low-cost housing and urban infrastructure projects.

The finance ministry has allowed HUDCO to raise Rs 5,000 crore through bonds during this fiscal, of which Rs 190.8 crore has been raised last month through private placement to institutional investors.

"We are launching the public issue of tax-free bonds on September 17. The issue will close on October 14," HUDCO Chairman and Managing Director V P Baligar told PTI.

"The minimum size of the bond issue is Rs 750 crore, but we expect to raise the entire Rs 4,810 crore as our coupon rate is very attractive," he said, adding that the bonds have got positive rating from India Rating and Research.

The funds would be utilised to finance the government's housing and urban infrastructure projects, Baligar added.

For retail investors applying for bonds upto Rs 10 lakh, the coupon rate shall be 8.39% per annum for 10 years, 8.76% for 15 years and 8.74% for 20 years.

The Bonds bear a coupon rate of 8.14% per annum for 10 years, 8.51% for 15 years and 8.49% for 20 years for Qualified Institutional buyers (QIB), corporates and high networth individuals (HNIs).

Baligar said this is the first public issue of tax-free bonds by HUDCO in this fiscal. The company had raised about Rs 2,400 crore during last fiscal.

HUDCO, a mini-ratna firm, is a techno-financial institution engaged in the financing and promotion of housing and urban infrastructure projects throughout India.

The company posted a net profit of Rs 700 crore over a total revenue of Rs 2,923 crore during last fiscal. It had sanctioned projects worth Rs 23,000 crore and disbursed Rs 6,000 crore in 2012-13 fiscal.

"Our target is to disburse Rs 7,000 crore during the current fiscal," he said.

Baligar also highlighted that Hudco has initiated some new schemes such as Rent-To-Own where the government employees would get an opportunity to own a house after retirement with the support of their organisations.

Another scheme HUDCO Nav Nagar Yojana (HuNNY) has been launched to provide support to urban locan bodies from planning to financing in the development of new extension and townships.

HUDCO has provided finance for over 15.59 million dwelling units and over 1,694 urban infrastructure projects till June 30, 2013.