Mumbai: Indian infrastructure space will be the centre of investors’ focus over the next few years, with ICICI Bank anticipating a role in investment of $20-$23 billion in this space by 2010-end.
“ICICI Bank believes that it would contribute $20-$23 billion in the $500 billion dollar capital expenditure requirement of the infrastructure sector in the next three years,” the bank’s Deputy Managing Director Chanda Kochhar said.
According to the bank’s internal estimates, the sector would need about $500 billion, with infrastructure projects accounting for nearly half this amount, through 2010.
The country’s largest private lender had recently announced a $2 billion infrastructure fund where it is pooling in capital from foreign investors to be invested in various infrastructure projects in India. The bank is already believed to have received commitments for one-fourth of the fund size and is likely to contribute about 15% ($300 million) of its own funds.
ICICI Bank is looking to follow this fund with a larger one worth $5 billion in 2-3 years.
“The two billion dollar fund is just the beginning. It is only a small part of our plans to invest in infrastructure projects,” she added.
“This fund would be involved mostly in equity investment and ICICI Bank’s share would be about 15%,” she said.
The fund, being managed by Credit Suisse, is likely to close in about three months.
ICICI Bank has recently overtaken SBI, its public sector rival and the country’s biggest lender, in terms of assets in overseas business. ICICI Bank’s asset base has grown to about $19 billion in 18 countries, compared to SBI’s $15-$16 billion in 35 countries.
“We still have to do a lot, given our potential,” said Kochhar, who is responsible for the bank’s overseas business.
“We are registering a 25% growth per annum, she said, adding that this rate should double the assets size in about three years.
When asked what was driving the overseas business of the bank, Kochhar said: “It is India-led growth that was driving our business to those geographies... Indian companies are involved in significant M&As, expansion, setting up businesses abroad and the bank was getting huge business from this...”
“Besides, we have built our scale to meet their (clients) requirements,” she added.
“Out of the 20 billion loan syndication last year for Indian companies’ overseas M&A deals, deals worth $9 billion were done by ICICI Bank. Two-three years back it used to be only foreign banks, now we are at number one position in syndicated financing,” Kochhar said.
“We had strong working relationship with these companies (for whom we raised loans). While this helped us quite a lot, had we not geared ourselves with new skills, it would not have been possible...We took the step for re-gearing ourselves (with required skill sets).”
While asserting that ICICI Bank aspires to join the top-25 league of global banks in five years from now, Kochhar said the bank was still small by global standards. The bank was involved in up to one per cent of global M&A business.
“If we stretch ourselves, we can get there,” she said.