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• L&T Infrastructure Finance, a subsidiary of L&T Finance Holdings, has mopped up around Rs 536 crore from its recently closed issue of tax saving infrastructure bonds. The mop-up is almost half of the Rs 1,100 crore worth of such bonds that the step down subsidiary of Larsen & Toubro has been allowed to raise in this financial year.A senior company official told Financial Chronicle that L&T has got a good response in the first tranche with a subscription of around Rs 536 crore collected via 2.38 lakh applications. “The collection in this issue is 48 per cent higher as compared to first tranche of similar bonds issued in the previous financial year. The bonds will be allocated to the investors in the next two to three days,” said the official.The company is now planning to launch the second tranche of its tax saving infra bonds next week, taking advantage of the bullish sentiment towards debt instruments and the concerted efforts being put in by brokers and intermediaries in selling such issues. L&T Infra Finance hopes the second tranche would allow it to raise the balance amount permitted by the authorities in the current year.

• The first tranche of its Rs 1,100 crore long-term Infra bonds were launched with two tenor options carrying a 9 per cent coupon rate. The bonds have a buyback options after fifth and the seventh year, respectively, and would be listed on the Bombay Stock Exchange after the lock in period of five years.These bonds are options given to infrastructure finance companies (IFCs) to support their lending to avoid dependence on banks. IFCs are not supposed to take deposits from retail customers. L&T Infra Finance was given the IFC status in July 2010. It can thus access long-term funds to meet its growth plans. To add to this, the limit of bank financing and external commercial borrowings it can raise as an IFC too is more than that available to normal NBFCs.

• The company claims to have a diversified disbursement mix with the power sector forming almost 39 per cent of its advances. The company also provides financing to telecom, roads, oil and gas, ports and other infrastructure sectors such as logistics and SEZs. The infrastructure finance division of L&T has been in business since 2007, and has been traditionally raising money from banks and mutual funds.

• Apart from L&T some other IFCs are also in market or are planning to launch tax saving bond issues. Rural Electrification Corporation (REC) launched its issue of tax saving bonds in the third week of December aiming to raise around Rs 1,000 crore. However, the response to its issue has not been up to the PSU’s expectations. DS Ahluwalia, executive director finance at REC told Financial Chronicle that REC now hopes to get a better response since all other issues are close. “We expect a subscription at the rate of around rupees one crore per day till the end of March, however we cannot guess the exact number since this is the last quarter when investors have to submit the investment proofs and lot of people are choosing the infra bonds as investment options, which provides additional benefit of Rs 20,000 tax saving under 80 CCF over and above rupees one lakh under 80C of the Income Tax Act,” said Ahluwalia.Even SREI Infrastructure Finance Company is launching its Rs 500 crore tax saving infra bonds this week.

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