Power Finance Corporation (PFC) has launched a tax-free bond issue to mobilise up to Rs.4,590 crore from investors.

The funds would be utilised towards lending purposes, debt servicing and working capital requirements.

The bond issue in the nature of secured, redeemable, non-convertible debentures with tax benefits under Section 10 (15) 9iv) (h) of Income-tax Act, 1961, will open on December 14 and close on December 21.

PFC Chairman and Managing Director Satnam Singh said that the company had permission to raise upto Rs.5,000 crore out of which Rs.410 crore had been raised through a private placement.

“So, now we are raising up to Rs.4,590 crore. Interest earned from this investment is tax-free and one can invest up to Rs.10 lakh in this issue,” Mr. Singh said. Tranche one of the issue is to mobilise up to Rs.1,000 crore with an option to retain oversubscription up to Rs.4,590 crore.

The bonds will have a tenor of 10-15 years offering an interest rate between 7.69 per cent and 7.86 per cent for retail investors and 7.19 per cent to 7.36 per cent for other category of investors.

The bonds are proposed to be listed on the BSE.

PFC is engaged in financing power generation and transmission projects. As per the XII Plan Rs.45 lakh-crore will go into infrastructure development, including Rs.14 lakh-crore in the power sector. Mr. Singh said that non-performing assets of the company did not go up in the last quarter.

Meanwhile, the company is planning to set up a $1 billion private equity (PE) fund in joint venture with Tata Capital to invest in the equity of private power projects.

Plans $1 b private equity fund in JV with Tata Capital