PWC to help fund-raising by CRDA on London Stock Exchange.

Posted by on July 9, 2017
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pwc crda fund raising london stock exchange
Amaravati: Taking a significant step towards helping Andhra Pradesh in mobilising financial resources for the construction of Amaravati, the British Government has engaged Price waterhouse Coopers (PwC) to facilitate the issuance of rupee-denominated ‘Masala bonds’ by A.P-Capital Region Development Authority (CRDA) on the London Stock Exchange (LSE).

PwC has already submitted its report on the proposed fund-raising to the British Government and it is being discussed by the British and A.P. Governments.

However, the quantum of borrowing has not yet been finalised, according to CRDA Commissioner Cherukuri Sreedhar.

Mr. Sreedhar told that the bonds would be devoid of repayment risks associated with the foreign exchange fluctuations as the money raised need only to be paid back in rupees rather than dollars. The risks would be borne by the investors. The A.P. Government is working out its modalities.

The construction of Amaravati, Mr. Sreedhar said, had been broadly estimated to cost Rs. 42,000 crore and loans amounting to $715 million ($300 million from the World Bank, $200 million from the Asian Infrastructure Investment Bank (AIIB) and $215 million equity contribution by the A.P. Government had been firmed up. Besides, there is a line of credit amounting to Rs. 7,500 crore from the Hudco.

CRDA Group Director (Finance) V. Rama Manohara Rao said that in addition to those tie-ups, the possibility of raising funds from institutions like the New Development Bank (formerly BRICS Development Bank), and the International Finance Corporation was being explored.

Further, some innovative project financing programmes like the Collective Investment Schemes and funding by real estate investment trusts are under examination. A feasibility of private placement of Rs. 2,000 crore worth Amaravati Development Bonds with institutions like the Life Insurance Corporation of India and Employees’ Provident Fund Organisation is also being looked into.

Plus, land monetization is a major source of finance for the CRDA, which is going to select an agency that will do the mandatory credit rating for it, latest by the end of next week inclusive of the time required to follow certain procedures.

It is expecting four or five players like the ICRA, Crisil and Brickwork Ratings to bid for the project. The credit rating might take a month once the agency is fixed.

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