Sumit Sharma (Bloomberg)
Mumbai: Infrastructure Development Finance Co. (IDFC), the Indian financier that set up a fund with Blackstone Group Holdings LP and Citigroup Inc., raised $519 million (Rs2,076 crore) selling shares to fund growing demand to build roads, and other public works projects in India.
IDFC sold 165.35 million shares at Rs27 apiece to raise Rs2,100 crore from institutional investors across Asia, Europe and the US, the lender said in a statement to the Bombay Stock Exchange.
“Investors see good growth potential in India and there is demand for Indian paper from most leading global investors,” said Jayesh Shroff, who helps manage about $5 billion at SBI Funds Management in Mumbai. “There is no dearth of projects to lend to in India.”
India needs $475 billion over the next five years to build more roads, power plants, ports and airports to facilitate growth in the world’s fastest growing major economy after China. The $854 billion economy grew at an average 8.6% over the past four years, the fastest in six decades, and the government wants to raise annual growth to 10% by 2012.
IDFC, based in Mumbai, set up a $5 billion infrastructure fund with New York-based Citigroup and Blackstone this year.Citigroup and UBS AG helped IDFC sell the shares to mutual funds, insurance companies, pension funds among other institutional investors. JM Financial Consultants Ltd and Kotak Mahindra Capital Co. also helped it sell the shares.IDFC will use the funds to bolster capital, give more loans and make investments, it said. The lender to public utilities, set up in 1997, is about half owned by overseas investors. Companies in the energy sector have received 37% of its loans, with 28% going to the transportation sector and 18% to telecommunications, according to its website.
IDFC’s fund raising follows a $5 billion share sale by ICICI Bank Ltd, India’s biggest financial services company by market value. HDFC Bank Ltd, UTI Bank Ltd and the State Bank of India, the nation’s biggest in terms of assets, also plan to sell shares to raise funds to increase lending and bolster capital to meet new rules.