MUMBAI: KKR-backed India Grid Trust (IndiGrid Trust), a power sector infrastructure investment trust (InvIT), obtained more than double subscriptions for its maiden public bond sale that opened for subscription Wednesday amid an economic depression.
A large Mumbai-based infrastructure conglomerate and a private life insurance company attached to a “salt-to-steel” group bid to own those papers with yield-hungry wealthy investors taking the lead, sources told ET.
Investor response defied an existing arid bond street, dented by the second wave of coronavirus. Those top-rated bonds are offering interest rates in the range of 6.75-8.21%.
“The issue has seen interest from various categories of investors including insurance companies which were very recently allowed to subscribe to debt securities of InvITs,” said Harsh Shah, CEO at IndiGrid. “The successful closure of this issue will open another source of long-term financing for IndiGrid as we have seen over 70% of demand in the longer tenor series in this issue.”
The non-convertible debentures, as known in market parlance, opened for subscription on Wednesday. The company received bids for about Rs 2,400 crore on the first day. The company will likely retain Rs 1,000 crore subscription as it plans to close the issue next few days.
“Institutions are scouting for high yielding debt securities amid record low interest rate environment,” said Ajay Manglunia, managing director – debt capital market, JM Financial. “Investors also do not want to compromise credit quality. IndiGrid papers serve both the purposes.”
Rating companies and India Ratings graded those papers with triple-A (Stable Outlook). JM Financial helped the company arrange the public offer.
However, retail investors bid over Rs 300 crore out of the total room of Rs 400 crore. Individuals can apply to the issue for a sum up to Rs 10 lakh each. Beyond this threshold, investors will be treated as high networth individuals (HNIs).
HNIs bid more than four times higher than the slated subscription pegged at Rs 400 crore.
Earlier in February, the government permitted investment trusts to raise money via bonds. Last week, the Insurance Regulatory Development Authority (IRDA) permitted insurance companies to subscribe to such bonds.