MUMBAI, July 25: BSES Ltd on Friday created a record of sorts by issuing preference shares with a low dividend of 9.5 per cent. The company, in a private deal, raised Rs 5 crore through an issue of five lakh preference shares to Federal Bank.

With this transaction, BSES has completed its targeted Rs 50-crore fund raising programme through the preference shares route in tranches during the last one year. The dividend rate has come down from 11.5 per cent to 9.5 per cent over the period.

The redeemable preference shares are for a period of three years and carry a put option at the end of 18 months. ``The company is now planning to raise a further Rs 150 crore through this route in the next one year,'' said BSES chairman and managing director RV Shahi.The funds will be used for strengthening the company's transmission and distribution network and for financing normal capital expenditure.

Preference shares have emerged as an attractive investment instrument after the 1997-98 budget because of removal of double taxation on dividend earnings in the hands of investors. Interest in the instrument has also been fuelled by a lacklustre primary market.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.