L&T Infra to raise Rs 1,100 cr via tax-saving infrastructure bonds

L&T Infrastructure, the infrastructure-financing arm of L&T Financial Holdings, will be looking to raise a total of Rs 1,100 crore via issue of tax-saving infrastructure bonds, this financial year. The non-banking financial company (NBFC) will be issuing the first tranche of the bonds from November 25 and will try to raise the entire amount in one go.

“These bonds are a source of steady cash flow. If we are unable to exhaust the issuance limit of Rs 1,100 crore limit this time, we will go for another tranche this financial year,” Y M Deosthalee, chairman and managing director, L&T Financial Holdings, said. These bonds will be offered at a coupon of nine per cent on a yearly as well as cumulative basis and will have a buyback option after five and seven years.

Tax saving infrastructure bonds allow retail participation in infrastructure funding and allow a tax rebate up to Rs 20, 000 under section 80 CCF of Income Tax Act on investment over Rs 1 lakh.

The bonds have a maturity period of 10 years with a lock-in period of five years, after which they can be traded on the Bombay Stock Exchange. The infrastructure bonds have been rated AA+ by CARE AND ICRA and the first tranche of issuance closes on December 24. ICICI Securities, JM Financial and Karvy are the lead managers for the issue.

The company has a loan book of Rs 8,790 crore. Its exposure to power and telecom sectors is 36.8 per cent and 11.8 per cent respectively. Although, the exposure to thermal power includes only operating projects, Deosthalee said issues pertaining to the power sector must be addressed soon.

L&T Infra is also looking to raise $100 million through extra commercial borrowing route. “The plan of raising $100 million is in the pipeline and we should be able to raise funds in a month’s time,” a senior official of the company said.