Srei to Raise Rs 500 cr via Bond Issue for Infra Lending : The Economic Times

Mumbai



The award of roads construction and improvement in coal availability may just not be a flash in the pan. Actual investments may be beginning to happen.

While state-run banks may be hesitant to fund new infrastructure projects, private lenders such as Srei Infrastructure are rolling up their sleeves.The company is on road to raise up . 500 crore in five-year bonds. to  The company is likely to hit the market early next week. Bonds would offer interest rates in the range of 10.50% to 11.25%, with maturities ranging between 39 and 60 months, two people familiar with the matter told ET. In the last financial year, the company had raised about 317 crore, while making a provision of around. 1,500 crore.

In its funding plans, the company aims to treble the proportion of funding through bonds and reduce its dependence on banks and deposits as the lower interest rate cycle would help it reduce cost of funding.

“Our share of bond borrowing is expected to increase to 10-15% in FY16 from 5-7% a year ago,“ said Sunil Kanoria, Vice Chairman, Srei Infrastructure Finance. “In the last one-and-a-half months, we have seen some interest in the infrastructure space. In the next six months from October onwards, project activities should pick up.“

The Kolkata-based company is likely to benefit disproportionately than its peers from the government's allocation of coal mines on the auction basis. Most of the coal deposits are in the eastern states such as Jharkhand, Chhattisgarh, Odisha and Madhya Pradesh.

“Mining sector should be a trigger for the same,“ said Kanoria. “The government too has to increase its expenditure in the sector.“

The bonds are rated AA and will also be sold to institutions, but at a slightly lower rates than to the retail investors. Investors can sell these since these would be listed on stock exchanges. The government is reportedly proposing to build around 5,000 km of roads all along the borders and coastal areas under a new scheme to be called “Bharat Mala“. Construction of the huge network is expected to cost at least ` . 50,000 crore. “People who are really dependent on interest income, should look to invest in these bonds,“ said Anup Bhaiya, MD and CEO, Money Honey Financial Services.