Indore Municipal Corporation (IMC) has launched India’s first public issue of municipal bonds intending to raise up to Rs 244 crore to fund a solar power project. This would be the first time a municipal body is targeting individual investors in India. The base issue size is Rs 122 crore with an option to retain an oversubscription of up to Rs 122 crore, aggregating up to a limit of Rs 244 crore.
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The issue will remain open for subscription during February 10-14. This is also a green bond as the proceeds will be used to fund a 60 MW captive solar photovoltaic power plant at the villages of Samraj and Ashukhedi in Madhya Pradesh’s Khargone district.
Municipalities are now allowed to issue bonds to raise money to fund public infrastructure, such as roads, water supply and sewerage. Although IMC is the first to target individual/retail investors, municipal bonds have hit the street before but catering only to institutional investors. Bengaluru MC floated municipal bonds for the first time in India in 1997, followed by Ahmedabad MC in 1998.
Municipal bond issuances came to a sudden halt after 2005 with the launch of the Jawaharlal Nehru National Urban Renewal Mission. To revive municipal bonds, the capital markets regulator Securities and Exchange Board of India (SEBI) came up with guidelines for issuing and listing municipal bonds in 2015.
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