IFCI to raise up to Rs 2,000 cr via public issue of bonds

IFCI is set to raise up to Rs 2,000 crore through public issue of bonds. The base issue size is Rs 250 crore with an option to retain over subscription of up to Rs 2,000 crore. The bonds are secured, redeemable and non-convertible in nature.

IFCI is a company promoted and controlled by government and now the government is planning to increase its stake. In IFCI the government has got equity of over 55% and if the preference shares are also taken into account, their capital is slightly below 50%. This stake they are planning to increase to over 50%.

"Government is trying to increase its stake and in the process of acquiring some of the preference shares so that the stake of government in IFCI increases." said Malay Mukherjee, CEO and managing director of IFCI at a press conference held today.

The bonds of IFCI is available in the tenure of five, seven and ten years while the coupon rate per annum ranges between 9.40-9.90%. There is an additional incentive of 0.10% per annum over coupon rate applicable for retail individual investors and high networth individuals.

The amount mobilised shall be used for lending and repayment of loans. The issue opens on Monday and is scheduled to close on or before November 21.

The bonds have been rated "BWR AA- (Outlook: Stable)" by Brickwork Rating and "[ICRA] A (Stable)" by ICRA. SBI Capital Markets, AK Capital, Edelweiss Financial Services and RR Investors Capital Services are the lead managers to the issue.

"This bond issue is primarily for the retail depositors. Retail depositors do not have much choice in today's market. They look at bank deposits as the only way to put their surpluses where interest rates are much lesser compared to what we are offering," said Mukherjee. The bonds will be listed on BSE and NSE.