Indian Railways to raise Rs.2000 Crore from Offshore Rupee Bond

New Delhi: For the first time, the finance arm of world’s largest railway network, Indian Railway Finance Corporation (IRFC) will list offshore rupee denominated bonds in the London Stock Exchange to raise 200 million dollar to 300 million dollar (approx. Rs 2,000 crore) to fund its modernization plans. “The exact date for the launch of the bond has not yet been decided but it is likely to get listed in the first month of the new year after Prime Minister Narendra Modi, in his Wembley address in London, set the tone for its listing in world’s premier exchange”, an official source said.

According to the official, IRFC will issue rupee denominated offshore bonds of five year tenure. The technical bids for the same would start from November 5 and will be finalized on November 20. IRFC has identified 66 prospective lenders. Railway Minister Suresh Prabhu, during his visit to United Kingdom last month, met investors at London Stock Exchange to gauge the market sentiment over the rupee bonds.

Mr Prabhu had interaction with various investors which included Standard Life, Citibank, SBI UK, SBI Caps UK, Prime Bridge Investments, London Stock Exchange, Standard Chartered Bank, ANZ bank, HSBC bank, Kotak Mahindra. Notably, Mr Modi in his speech to a gathering of 55,000 people at Wembley stadium had said “after James Bond, Brook Bond now it’s the time of rupee bond”, setting the stage for launch of the offshore bond which is aimed at borrowing money from world markets to fast track the modernization plans of world’s largest rail network. In the railway budget 2015-16, Mr Prabhu had proposed to rope in private sector to modernise stations Banks, pension funds keen to invest in Railways and set a target of 8.5 lakh crore investment in Railways in the next 5 years.

There are currently 55 Indian or India-focused companies quoted on London’s markets in addition to 26 Indian Global Depository Receipts listed on London’s International Order Book. In 2014, the total value of Indian GDR trading on IOB was 6.23 billion dollars. Indian companies have raised equity capital worth 8.1 billion dollar in London. London Stock Exchange has seen 27 rupee or Masala bonds listed in total on its markets (12 currently active) that have raised GBP equivalent of 2.85 billion pounds.


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