After the successful follow on offer for Rs 3,700 crore, Tata Steel is all set for another round of fund raising. Sources indicate that the steel giant is looking to raise about USD 500 million for long term capex plans and to reduce debt.

The company may opt for the perpetual bond route to raise the amount. Sources say this is so that there is no dilution promoter stake further.

The company had diluted the promoter stake by almost 2.4% in the earlier FPO. The current promoter holding in Tata Steel is close to 30%.

Perpetual bonds are treated as equity capital and they do not dilute the promoter’s shareholding. They don’t have a maturity date and are usually marked by interest payments through the life of an investor.

The interest payments on such bonds are quite high. Also, they have to be serviced forever.

Sources say the company may look at some of the international markets with interest rate close to 9%.