HOUSING AND URBAN
DEVELOPMENT CORPORATION LIMITED
After the REC tax-free bonds, the next company
to come up with such an issue is Housing and Urban Development Corporation
Limited (HUDCO). The company will be launching its issue from the coming
Tuesday, September 17.
As compared to REC’s 8.26% (10Y), 8.71% (15Y) and
8.62% (20Y), HUDCO is offering 8.39%, 8.76% and 8.74% rate of interest for the
respective tenors.
Though the interest will
be paid annually but the date is not available. No prospectus available on
company’s website.
HUDCO is raising total Rs. 5,000 crore from this tax-free
bonds issue in this financial year, out of which it has already raised Rs.
190.80 crore through private placement. So, now it plans to raise the remaining
Rs. 4,809.20 crore through this public issue, including the green-shoe option
of Rs. 4,059.20 crore. The base issue size is Rs. 750 crore.
The official closing date
of the issue is October 14 and the company may extend or preclose the issue,
depending on the investors’ response to the issue.
The main features of REC issue as maintained below:
Rating of the issue - CARE and India Ratings have assigned a
rating of ‘AA+’ to this issue, which is also ‘Secured’ in nature. HUDCO is
wholly-
owned by the government of India, so the investors’
investment is quite safe.
Listing - HUDCO will get these bonds listed only on the
Bombay Stock Exchange (BSE). The allotment and the listing will happen within
12 working days from the closing date of the issue. Investors can apply for
these bonds either in physical form or in demat form, as per their comfort and
requirement.
Interest on Application Money & Refund - The investors will get interest on their application money also,
from the date of investment till the deemed date of allotment, at the same rate
of interest as the applicable coupon rate is. Unlike REC issue which is to pay
5% p.a. interest on the refund money, HUDCO will pay the applicable coupon
rate.
Categories of Investors & Basis of Allotment - The investors again have been classified in the following four
categories and each category will have certain percentage of the issue reserved
for the allotment:
Category I – Qualified Institutional Bidders
(QIBs) – 10% of the issue is reserved
Category II –
Non-Institutional Investors (NIIs) – 20% of the issue is reserved
Category III – High Net Worth Individuals
including HUFs, NRIs & QFIs – 30% of the issue is reserved
Category IV – Resident
Indian Individuals including HUFs, NRIs & QFIs – 40% of the issue is
reserved
QIBs portion had 20% of
the issue reserved in the REC issue and after observing their response in that
issue, their reserved portion has been reduced to 10% in this issue. Category
III HNI investors will get this 10% share of the pie. NRIs are eligible to
invest in this issue as well, on a repatriation basis as well as on
non-repatriation basis. Qualified Foreign Investors (QFIs) are also eligible.
Minimum & Maximum Investment - There is no change in the minimum investment requirement of Rs.
5,000 i.e. at least 5 bonds of Rs. 1,000 face value each. Retail Investors’
investment limit stands at Rs. 10 lakhs, beyond which they will be considered
as HNIs and will get a lower rate of interest.
Interest rates of this
issue look very attractive for the investor. I think it is good investment
option for the investor of any tax bracket. Investors must go with it for safe
and reasonable return.
For more detail about any other query related investment,
you can contact me through my email.
Warm regards,
Arvind Trivedi, Certified Financial
Planner
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