Food Corporation of India likely to raise up to Rs 13,200 crore

FCI has appointed about two dozen local arrangers to help raise the money.

BCCL
Mumbai: Food Corporation of India (FCI) is set to raise up to Rs 13,200 crore through government-backed bonds in one of this year’s biggest such sales, hoping to attract large banks, pension funds, insurers and mutual funds amid growing aversion to debt offered by private companies.

The state-owned company aims to increase storage capacity of farm produce, for which it also requires limited capital infusion from the government, said three people with direct knowledge of the matter. FCI has appointed about two dozen local arrangers to help raise the money.

“The company is awaiting the final approval from the ministry of law, which has to sign an agreement for the proposed sovereign guarantee,” one person said.


The arrangers are in talks with potential investors, including a large state-owned bank, the Employees’ Provident Fund Organisation and a large state-owned insurer.

The bonds may be of 10-year maturity primarily and could be offered within a week of obtaining approval from the law ministry. The money may be raised in one or two tranches.

“Discussions with the retirement body and the large bank appear to be fruitful as they look eager to own such quasi-sovereign paper when all of them shy away from private sector companies,” said a senior executive involved in the process.
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FCI did not respond to queries from ET seeking comment on the fund-raising. EPFO could not be contacted immediately for comments.

FCI needs capital to maintain food stocks worth Rs 60,000 crore -1.03 lakh crore, said another person. While it has already tied up with lenders for short-term working capital, the proposed government-backed bonds will help.
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