BackAxis Bank raises Rs5,700 crore through infrastructure bonds
Money will be used to fund long-term infrastructure and housing projects
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Mumbai: Axis Bank Ltd, India’s third largest private sector bank, raised ₹ 5,700 crore by selling long-term infrastructure bonds to a clutch of investors. It’s the highest amount a bank has raised by selling such bonds since the Reserve Bank of India (RBI) announced norms for these instruments in July.
The bonds closed for subscription on Wednesday after opening on 20 November, according to two people familiar with the issue.
“The subscription has closed officially and only some paper work is left after which the regulators will be informed. The amount in fact has been already transferred to the bank. The bonds will mature in 10 years," said one of the two persons, who spoke on condition of anonymity.
ICICI Bank Ltd had raised ₹ 3,900 crore in September by selling similar 10-year bonds to a clutch of domestic and institutional investors.
Compared to the 9.25% annualized yield ICICI paid for the bond in September, Axis’ issue was priced at a tighter 8.85%.
The bonds were sold under new rules framed by the RBI for lending to infrastructure and affordable housing projects which exempt the banks from the central bank’s reserve requirements and also priority lending sector targets under which banks have to give 40% of their loans to agriculture, small businesses and weaker sections of the society.
On 21 August, Axis Bank had taken approval from its board of directors to raise as much as ₹ 6,000 crore by selling such bonds.
“This issue was what we could raise. It took more than 10 days to close the issue because a large anchor investor had to do some internal procedures before investing. That investor finally took some part of the issue and in total there were 20 investors. The money will be used to fund long-term infrastructure and housing projects," the person cited above said.
A bank spokesperson said he could not give details of the bonds immediately.
Axis Bank is the fourth bank to raise money through these bonds following ICICI Bank, Kotak Mahindra Bank Ltd and Andhra Bank.
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