Mumbai, April 30: Mahindra & Mahindra Ltd has raised $100 million through foreign currency convertible bonds (FCCB) from investors in Europe and Asia.

The issue, launched today, was oversubscribed and was priced at zero coupon for a five-year tenure with a redemption price of 117.49 per cent to yield 3.25 per cent till maturity.

Executive director finance and corporate affairs Bharat Doshi said, “The successful completion of the issue indicates the continued interest of global investors in the company.”

After many years, M&M and other companies are experiencing a boom in the automobile sector. After being in the doldrums for many years, the tractor market is seeing a revival and M&M, being a leader in the segment, has seen a rise in sales.

Scorpio, the company’s indigenous utility vehicle in the premium segment, was a success as it created a niche for itself competing with rivals like Toyota’s Qualis and Tata Motors’ Safari.

The company recently made an unsuccessful bid for Valtra of Finland, a leading tractor maker having a sizeable market share in Europe and Latin America.

Doshi said the proceeds of the issue would be used for product development, modernisation and expansion of the existing manufacturing facilities and expansion by internal growth and overseas acquisitions.

The company is believed to be readying another model in the utility vehicle segment to complement the Scorpio.

M&M officials were guarded about their future plans. The company, however, is clear that the money will not be used for refinancing its old debt.

This will be used for expansion and modernising or buying equipment.

The conversion price was fixed at Rs 647.05, which is at a 37 per cent premium to yesterday’s closing share price of Rs 472.30.

ABN Amro Rothschild and Kotak Investment Banking were the joint book-runners for the transaction.

The issuer has a call option starting after two years till maturity with a hurdle rate of 120 per cent over the conversion price.

Recently, several bluechip companies like Tata Motors, Zee Telefilms and Reliance Energy have tapped the overseas markets for funds.

These companies have succeeded in raising capital at a premium to the market price of the share.