India Renewable Energy Development Agency Limited (IREDA) has launched tax free, secured, redeemable, non-convertible bonds of face value of Rs 1,000 each. The renewable energy financing arm of the government wants to raise Rs 1,000 crore with an option to retainoversubscription up to Rs 1,716 crore.
The bonds are in the nature of debentures with benefits under section 10(15) (iv)(h) of the Income Tax Act 1961. The interest income on bonds is exempted from levy of income tax in the hands of the investors.
The Issue will open for subscription on January 8, 2016 and is scheduled to close on January 22, 2016 with an option for early closure. The bonds will be listed on the Bombay Stock Exchange within 12 working days from the issue closure date.
For qualified institutional investors, domestic corporates and high net worth individuals, the Bonds under Tranche -I, Series 1A, the Tranche -I Series 2A and the Tranche -I Series 3A will carry interest at the coupon rate of 7.28 per cent annual, 7.49 per cent and 7.43 per cent, for a tenor of 10 years, 15 years and 20 years, respectively, payable annually from, and including, the Deemed Date of Allotment up to, but excluding, their respective Maturity Dates, payable on the “Interest Payment Date”, to the bondholders as of the relevant record date.
For retail individual investors, the Bonds under Tranche I Series 1B, the Tranche I Series 2B and the Tranche I Series 3B will carry higher interest at the coupon rate of 7.53 per cent, 7.74 per cent. and 7.68 per cent, for a tenor of 10 years, 15 years and 20 years, respectively, payable annually from, and including, the Deemed Date of Allotment up to, but excluding, their respective Maturity Dates, payable on the “Interest Payment Date”, to the Bondholders as of the relevant Record Date.
The minimum application size for the Issue is five bonds (Rs 5,000) (individually or collectively, across all series of bonds) and in the multiple of one bond (Rs 1,000) thereafter.
The net issue proceeds as raised through each of the Tranche(s) less the expenditure will be utilised for (a) the purpose of financing/ re-financing renewable energy and energy efficiency projects, augmenting the resource base/ setting up of renewable energy projects.: minimum 75% of the net amount raised and allotted in the Issue; and (b) for General Corporate purpose: upto 25% of the net amount raised and allotted in the Issue. The unutilised amount if any will be used for purpose of financing/ re-financing renewable energy and energy efficiency projects/augmenting the resource base/ setting up of renewable energy projects/repayment of loan.
The lead managers to the issue are Karvy Investor Services Limited, A K Capital Services Limited, Edelweiss Financial Services Limited, IDBI Capital Market Services Private Limited and RR Investors Capital Services Private Limited. The debenture trustee for the bondholders is IL&FS Trust Company Limited. Dhir & Dhir Associates, Advocates and Solicitors acted as the legal counsel to the issue.