Indore Municipal Corporation ("IMC" or "Corporation"), was established in the year 1956 under the Madhya Pradesh Municipal Corporation Act, 1956. Its public issue of rated, listed, taxable, secured, redeemable, non-convertible green municipal bonds saw itself list on NSE on February 21, 2023.
According to the base issue size, the Institution/QIB category was subscribed the most with 7.52 times, followed by 6.70 times in the corporate category, 5.78 times in the retail category, 3.62 times in the HNI category. The Issue opened on February 10, 2023 and closes Tuesday, February 14, 2023.
The Green Bonds have a tenor of 3 years (STRPP A), 5 years (STRPP B), 7 years (STRPP C) and 9 years (STRPP D). Effective yield (per annum) for NCD holders in Category I (QIB), Category II (Corporate), Category III (HNI) and Category IV (Retail Individual) for tenor 3 years, 5 years and 7 years is 8.41% and for STRPP D with 9 years' tenor is 8.42%. Interest payments are through various modes, i.e., Direct Credit, NACH, RTGS, NEFT and Registered Post/Speed Post.
The Green Bonds have been assigned a rating of 'CARE AA: Stable' by CARE Ratings Limited and 'IND AA+/Stable' by India Ratings & Research Private Limited.
On the listing event held at Kushabhau Thakre convention centre at Bhopal, Shri Shivraj Singh Chouhan, Chief Minister, Madhya Pradesh said "Indore is the city which thinks outside the box and does outside the box. For e.g the listing of green bond on the exchange .Our Prime Minister has announced a program under the name "Panchamrut". The intention to increase the non-fossil energy to 500 GW by 2030, but also at the same time to ensure that 50 per cent of the energy requirement comes from renewable energy and India is to achieve the target by 2070. Electric buses have been introducing in the city and have also installed 26 charging stations. The municipal corporation has planted atleast 2 lakh sapplings at Nehru Park, Meghdoot Garden, airport and regional parks to improve the air quality of Indore and as a result we have registered 4 lacs carbon credit and have generated a revenue of Rs 9 crore under a business model. A power plant has been installed at Jalud where they will produce electricity and bring down their electiricity bill for the people of Indore. On the occasion of Solar day which falls on May 3rd, Sanchi will become the country's first solar city which is world-famous for stupas and Buddhist pilgrimage sites".
Indore's Mayor Shri Pushyamitra Bhargava said "It is Shri Shivraj's vision to make Indore the world's leading smart city. As a result, Indore was able to list India's first green bond, which will enable Indore to reduce carbon emissions with the aid of a solar plant. The issue garnered Rs 721 Crore, which is just the beginning and thanks to Shri Shivrajji's long-term thinking and dedication and Indore will continue to set a great example for India with new initiatives and will strive for prosperity".
Shri Ashishkumar Chauhan, MD and CEO, NSE said, "The launch of Green Bond issue by Indore municipal corporation is a great example of cooperative federalism & depth of local governance model in India.
Rapid growth of urbanization requires urban local bodies to keep up with the huge expansion and upgrades to the existing urban infrastructure. Municipal bonds provide an alternative means of financing to urban local bodies and reduce the dependency on central and state grants. Most of the urban infra bonds may be categorized as green bonds given that proceeds are predominantly targeted towards energy, transport, water management, sewage treatment, energy saving etc. Green Municipal bonds will also bring in new foreign investors who specialize in sustainable financing and invest in projects with environmental, social and governance considerations.
The public issue of Indore Municipal bonds got an overwhelming response with an overall subscription of 5.91 times the issue size. It reflects that there is good appetite among the investors for Green bonds. Municipal bonds provide an opportunity to participate in nation building in addition to earning returns. The public issue of green bonds by IMC would give impetus to development of green financing and contribute towards India's vision for transition towards a clean and green energy future.
The global green bond market is witnessing an exponential growth and has crossed the milestone of 2 trillion USD in terms of cumulative green bond issuance. India has also witnessed green bond issuances of about 10.8 billion USD during 2019-2022 by the corporates, PSUs and financial institutions. The public issue of green bonds by IMC would give impetus to development of green financing and contribute towards India's vision for transition towards a clean and green energy future.
NSE is committed to play an active and participatory role while contributing towards India's vision of sustainable future enshrined under "Panchamrit" vision of our honorable Prime Minister".
Shri AK Mittal, AK Capital Services Ltd, Lead Manager to the Issue, said "Congratulations to Indore Municipal Corporation for raising India's first public issue of green municipal bonds of INR 244 crores at highly competitive rates. The issue has been over subscribed by roughly 6 times, depicting strong investor confidence.
Furthermore as these bonds are rated as AA+ by India ratings and AA by CARE ratings, they provide a secured investment with an attractive return for the investors.
After the success of this issue and noticing sustained rapid developments in the Indian municipal bond markets, we expect that more ULBs will explore debt markets to raise funds via green bonds.
We as lead managers feel proud to be associated with the issue."
Shri Arnab Choudhury, Executive Vice President & Group Head (Debt Capital Markets), SBI Capital Markets, Lead Manager to the Issue, said "Government of India has laid special emphasis of development of Municipal Bond market in this budget. We are happy to note that Indore Municipal Corporation has taken the lead and issued its green municipal bond in record time with public participation. We are proud to have partnered with Indore on this momentous achievement and we are sure that this is just the beginning of the journey for Indore".
The Lead Managers to the bonds issue were A.K. Capital Services Ltd and SBI Capital Markets Ltd.