Engineering giant Larsen & Toubro on Monday said L&T Finance, its wholly-owned financial services arm, might come out with an initial public offering (IPO) during the current financial year, depending on market conditions.
“It can happen this fiscal or some time next financial year depending on market conditions,” L&T Chief Financial Officer Y M Deosthalee said here.
As per the Securities and Exchange Board of India (Sebi) norms, a company can come out with a public offer within a year of getting the regulator’s nod. The company had got Sebi’s approval a few months ago.
“If the market continues to be volatile, launching an IPO will not be desirable,” he said.
The company plans to raise around Rs 1,500 crore through the IPO and will use the proceedings to expand its business by launching new products and services, as well as entering new lines of businesses. Talking about tax-free bond issuance from L&T Infrastructure Finance, a wholly-owned subsidiary of L&T Finance Holding, Deosthalee said the proposed issued had opened for subscription on Monday.
The company proposes to issue secured redeemable non-convertible debentures aggregating up to Rs 100 crore, with an option to retain an oversubscription of up to Rs 300 crore for allotment of additional bonds. The 10-year bond, which would be available in two series, comes with a lock-in period of 5 years. The coupon rate on series I paper is 8.2 per cent paid annually, while on the other it is 8.3 per cent on a compounded basis.
The bond issue is under Sec 80CCF of the Income Tax Act, wherein an investor can avail a deduction of up to Rs 20,000 in the taxable income for the current financial year.
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The deduction is over and above the Rs 1 lakh deduction under Section 80CC of the Income Tax Act.
The bonds would be listed on the National Stock Exchange. Besides, it comes with buyback offer at the end of 5th year and 7th year.