Fis, Banks Bail Out Tisco Bond Issue

The issue which closed on Wednesday would have had a higher undersubscription, but for the financial institutions which bailed out Tisco on the request of Tisco chairman J J Irani.

Merchant banking sources said the UTI, LIC, GIC and among banks, SBI and ANZ Grindlays, bailed out the placement portion of the Tisco Trust Bonds. The five pumped in Rs 50 crore each while the retail portion of Rs 100 crore of the Rs 350-crore placement portion did not evoke an enthusiastic response. The Rs 150-crore public portion is slated to open on September 23. J M Financial, the book runners for the placement portion of the issue, were not available for comment.

 

The shortfall is attributed to the higher coupon on the L&T bonds, and a debt fatigue on part of investors. The yield on the Tisco bonds works out to 17.45 per cent for a 10-year paper, while L&T is offering 17.50 per cent for seven years.

Meanwhile, rival merchant bankers are blaming each other for the failure of the placement portion of the Trust Bonds. JM Financial & Investment Cons-ultancy Services Ltd blames other merchant bankers for the failure. JM Financial sources said with some of the merchant bankers actively garnering fixed deposits, selling debt issues for them has become secondary.

Officials in Kotak Mahindra said that two separate companies are handling the fixed deposits and bond issues.

While KMCC is handling the debt issue, KMFL is mobilising fixed deposits. In any case, fee- and fund-based activities are carried on in every organisation and these don