PFC's Rs 100 cr tax-free bonds issue opens tomorrow

Proposed issue is part of its plan to garner Rs 5,000 cr by way of issuing tax-free securities in the current fiscal

State-run Power Finance Corp (PFC) plans to raise Rs 100 crore through tax-free bonds issue that begins tomorrow.

The proposed issue is part of its plan to garner Rs 5,000 crore by way of issuing tax-free securities in the current fiscal (2012-13). Out of the total target, Rs 1,110 crore has already been raised.

"PFC to raise Rs 100 crore through this issue with an option to retain over-subscription up to the Residual Shelf Limit (Rs 3,890.25 crore) prior to March 31, 2013," according to information available with the market regulator Sebi.

"The company is also considering the raising of funds via private placements of the bonds in one or more tranches during the process of the present issue, within the Residual Shelf Limit, at its discretion," it added.

The issue would open tomorrow and close on March 15, 2013.

The funds would be utilised towards lending purposes, debt servicing and working capital requirements, PFC said.

The bond issue would be for a period of 10-15 years offering an interest rate between 6.88 per cent and 7.54 per cent. The bonds are proposed to be listed on the BSE.

PFC said Ministry of Finance has authorised it to raise the bonds aggregating to Rs 5,000 crore in fiscal 2013 out of it has raised an amount of Rs 410 crore on a private placement basis. Additionally, it also raised Rs 699.75 crore in December.

ICICI Securities Ltd, AK Capital Services Ltd, Axis Capital, Kotak Mahindra Capital Company Ltd, SBI Capital Markets Ltd are acting as lead managers to the issue.

PFC, which provides and arranges finance for the electrical power sector, posted a net profit of Rs 1,117 crore for the third quarter of this fiscal, against Rs 1,108 crore in the same period of previous fiscal.

The company's total income from operations rose to Rs 4,465.37 crore for three months ended December 31, 2012 from Rs 3,282.35 crore in the same period last fiscal.