The tax-saving bond issue will be open till November 2

Diversified group L&T's infrastructure finance subsidiary on Thursday said it planned to raise up to Rs.700 crore from retail investors through a long-term tax-saving infrastructure bond issue.

The issue of the ten-year maturity bonds, which will be open till November 2, comes close on the heels of L&T Infra's peer in the infrastructure finance companies (IFC) space, IDFC, hitting the market with a similar Rs.3,400-crore issue.

“We were encouraged by the high retail participation in L&T Finance's two issues last year. Targeting retail investors to raise money at reasonable rates is a part of our strategy to enlarge our liability base,” L&T Infra Director Y. M. Deosthalee told reporters here. The company, which has been in business since 2007, had been traditionally raising money from banks and mutual funds.

The current issue involves issuing bonds of up to Rs.200 crore with an option to retain over subscription of another Rs.500 crore. It has been split in four series and can be held either in the physical or dematerialised (demat) form.

The face value of each bond is Rs.1,000 and the interest offered varies between 7.50 and 7.75 per cent. There is a buyback window after five or seven years and L&T infra plans to list them for trading on the National Stock Exchange.

For retail investors, subscriptions of up to Rs.20,000 in the bonds are eligible for deduction in computation of taxable income under Sec.80 CCF of the Income-tax Act.

On L&T Finance Holdings' Rs.1,500-crore IPO, L&T's Senior Vice-President N. Sivaraman said the company was awaiting approvals from SEBI to go ahead with it. L&T Finance Holdings is the parent company of L&T Infra.

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