New Delhi: State-owned India Infrastructure Finance Co. Ltd (IIFCL) said on Wednesday that it has received a nod from Securities and Exchange Board of India (Sebi) for floating a $1 billion (about Rs.5,000 crore) infrastructure debt fund (IDF), which will be operational in a month.
“Yesterday, we got the approval of Sebi that we have been registered as an IDF... Within a month’s time we should be able to operationalize this IDF,” IIFCL chairman and managing director S. K. Goel said.
“IDF initial corpus we have kept in mind is $1 billion of which 50% will be contributed by Indian investors and 50% by foreign investors,” he said at the launch of first credit enhanced infrastructure bonds.
IDF will be floated via the mutual fund route which is more flexible, Goel said. “Among the Indian investors we have already discussed the things with LIC, IDBI Bank and on the capital front the State Bank of India is with us,” he said.
“About foreign partners, we have already sent our request to ADB (Asian Development Bank), which is processing about $200 million request, but only after final sanction we will be able to say who are the final partners into this,” Goel added. The fund generated by the IDF will be utilized for funding infrastructure projects in the country. India’s poor infrastructure, seen as a major block for economic growth, requires a whopping $1 trillion in the 12th Plan period (2012-17).
Of this, about 50% is expected to come from the private sector. Meanwhile, the infrastructure financing company launched its credit enhancement initiative with the support of the ADB by signing IIFCL Guarantee with GMR Jadcherla Expressways Ltd. Financial services secretary D. K. Mittal said the initiative will help develop a bond market for infrastructure sector, which is predominantly dependent on banks for funding. It will also help banks in managing challenges like asset liability mismatch and exposure constraints which they face in long term infrastructure lending, Mittal said. Explaining the scheme, Goel said infrastructure developers can raise the bond in the market. IIFCL is giving a partial guarantee to enhance the rating to AA so that provident fund and the insurance sector long term investors can invest in this.
“Today Rs.309 crore bond issue has been approved and it (GMR Jadcherla Expressways Ltd) is going to the market and we are giving about 24% partial guarantee to this bond issue to raise the rating to AA,” he added.