Msebs Rs 100-Crore Bonds Oversubscribed Nearly 100%

The Rs 100-crore bond issue floated by the Maharashtra State Electricity Board (MSEB) to pick up a 30 per cent stake in the Dabhol Power Company has been oversubscribed by atleast 100 per cent.

The issue which has been floated through the book-building route is targeted at leading corporates and institutional investors. It will close in about a week.

Sources said the bond float had already gathered more than Rs 200 crore but declined to reveal the exact figure. It is premature to reveal the exact figure now, they added.

The tenure of the bond is between 8-10 years and carries a coupon rate of about 14 per cent. The issue, which has an unlimited greenshoe option, has been backed by an irrevocable guarantee by the Maharashtra government.

This is one of the best bonds in terms of security structure and coupon rate.

Besides, there is an appetite for this kind of paper, sources stated as the reason for its success. Subscribers have the first charge on MSEBs assets.

This is the second tranche of the bond issue floated by MSEB to pick up a 30 per cent stake in Dabhol Power Company. The first tranche of Rs 150 crore garnered about Rs 275 crore.

However, there is a significant difference between the two issues. While the first tranche was tax free at the hands of the investor the second isnt.

JM Financial & Investment Consultancy Services has been the sole lead arranger to both issues. Bank of Maharashtra and Canara Bank have been the co-lead arrangers to both issues.

MSEB needs about Rs 746 crore to pick up a 30 per cent stake in DPC.

The two bond issues will collectively net about Rs 500 crore for MSEB. The remaining amount is being raised through an ECB of $50 million. Sources stated this is likely to be the last bond issue to be floated by MSEB.

The board has already floated a special purpose vehicle, Maharashtra Power Devel-opment Corporation (MPDCL) for picking the stake. MSEB is likely to hold 70 per cent. The state development financial institution, Sicom has decided to pick up 15 per cent in MPDCL.

The remaining 15 per cent is likely to be picked up by another state government undertaking Maharashtra Agro Industries Development Corporation.