Damodar Valley Corporation is raising Rs 500 Cr by a private placement of NCDs. The issue will also have a greenshoe option to raise another Rs 140 Cr. The issue will open on Feb 19 and close on Feb 23. The bonds will carry a coupon rate of upto 8.95%.

The seven year bonds will be secured by assets, which means it cannot be pledged to get another loan. It is also being backed by a ‘sinking fund’. DVC will set aside a Rs 100 Cr sinking fund annually.

DVC – established in 1948 - is the first multipurpose river valley project India. The initial focus of the DVC were flood control, irrigation, generation, transmission and distribution of electricity, eco-conservation and afforestation. However, over a a period of time, power generation gained priority.

DVC is setting up a 500 MW power project at Chandrapura, which is expected to be operational by March 2010.

DVC is also setting up additional 4700 MW thermal power capacity alongwith upgradation of existing T&D infrastructure, at an aggregate project cost of Rs.25,095 Cr. All the projects are expected to be operational in a phased manner by FY12.

The funds raised by the bond issue will be used to finance the cost of the ongoing projects.

Power Supply Position in Jan'10

**Data: Central Electricity Authority

Arrangers for the issue include AK Capital, ICICI Securities Primary Dealership, Trust Capital, Darashaw Securities, Axis Bank, IDFC SSKI, SPA Merchant Bankers, ICICI Bank and Almondz Global.

Power sector companies raised around Rs 23,000 crore from the capital markets between Feb'08 and Nov'09.Adani Power raised Rs 3,000 crore in Aug'09, NHPC raised around Rs 6,000 crore in Sept'09, and Indiabulls Power raised Rs 1,529 crore in Oct'09.

Transaction Reference: BS

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