IDFC is offering 8 per cent interest on the bonds with the option to receive interest annually or cumulatively
Mumbai: Infrastructure Development Finance Company (IDFC) has launched the second tranche of its 10-year tax-saving infrastructure bonds.
The bonds offer a coupon of 8 per cent. Investors can choose to receive the coupon annually or opt for the cumulative option with the interest compounded annually. The minimum subscription amount is Rs 10,000 and higher amounts in multiples of Rs 5,000 thereafter. The bonds have a buy back option after 5 years.
IDFC had filed an umbrella prospectus to raise Rs 3,400 crore through issue of infrastructure bonds. In the first tranche in October 2010, IDFC had raised Rs 436 crore from 2, 35,705 investor applications. It can raise another Rs 2,929 crore under the prospectus. The bond issue opened on January 17 and will close on February 4, 2011.
The infrastructure bonds by IDFC are secured by certain receivables and immovable properties. Investors can claim tax deduction on investment of Rs 20,000 in infrastructure bonds in 2010-11 under Section 80CCF of the Income Tax Act.
The bonds have been rated LAAA by ICRA and AAA (ind) by Fitch.
The bonds are proposed to be listed on BSE and NSE for trading after the lock-in period of five years.
The lead managers to the issue are Kotak Mahindra Capital Company, Enam Securities, HDFC Bank Ltd, ICICI Securities Ltd, JM Financial consultants and IDFC Capital Limited. IDBI Trusteeship Services is the trustee for the bonds.
IDFC will be paying Rs 50 crore as selling and brokerage commission to the lead managers.
The bonds will be marketed by empanelled brokerage houses and their sub-brokers. The brokerage houses are: HDFC Securities, IDBI Capital Market Services, Integrated Securities, JM Financial Services, Karvy Stock Broking, Kotak Securities, NJ India Invest, RR Equity Brokers, Sharekhan and SMC Global Securities.
Here’s a guide to becoming a sub-broker to be able to distribute bonds issued by companies:
Eligibility to become a sub-broker:
A sub-broker may be an individual, a partnership firm or a corporate. The individual sub-broker, directors in a sub-broking company and partners of a broking partnership firm have to comply with the following requirements:
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2-3 years experience in the broking business, either as a sub/main broker, or as an employee of a main/sub broker.
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Shall have at least passed 12th standard equivalent examination from an institution recognised by the Government.
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Corporate entities shall have a minimum paid up capital of Rs 5 lakh and it shall identify a dominant shareholder who holds a minimum of 51 per cent shares either singly or with the unconditional support of his/her spouse.
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No sub-broker is allowed to buy, sell or deal in securities, unless he or she holds a certificate of registration granted by SEBI.
Infrastructure Requirement
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Should have approved commercial office space of minimum 300 Sq. Ft.
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Should have required infrastructure in the office to run the business ( i.e. two computers, online UPS minimum 2KVA, fax machine, internet connection & dot matrix printer 132 Col.)
