IDFC to sell up to $1bn in infra bonds

India’s IDFC, which the Reserve Bank of India qualified as an infrastructure finance company last year, is planning to sell up to Rs.50bn in Rs.5,000 bonds in the upcoming fiscal year.

India’s Infrastructure Development Finance Company (IDFC) is offering up to Rs.50 billion (€749.9 million; $1 billion) in tax-free, long-term infrastructure bonds.

In a preliminary prospectus filed with the Securities and Exchange Board of India, IDFC said it would sell up to Rs.50 billion in Rs.5,000 bonds in one or more tranches in the 2011 to 2012 financial year.

The bonds will mature in a minimum of ten years, according to the prospectus, which states that further details will be laid out in a subsequent tranche prospectus.

In June 2010, the Reserve Bank of India classified IDFC as an Infrastructure Finance Company, meaning that IDFC must keep at least 75 percent of its total assets in infrastructure loans. The classification also eased IDFC’s ability to raise money on foreign capital markets without seeking government approvals.

In the prospectus, IDFC cautioned potential investors that the long-term infrastructure bonds have “no established trading market”. The bonds cannot be traded for five years, and IDFC said it cannot be guaranteed that a public market for the bonds will develop following the end of the lock-in period.

IDFC has businesses in private equity, project equity, mutual funds, and corporate investment banking, according to the firm’s website. IDFC’s private equity arm manages three funds with assets of Rs.57 billion and is currently invested in companies and projects including Delhi International Airport, Suzlon Energy, Moser Baer Solar, GMR Energy and urban development project International Recreation Parks.

IDFC’s project equity arm manages the Rs.38 billion India Infrastructure Fund, which focuses on venture capital investments in domestic projects, according to the IDFC website.