Infrastructure Development Finance Co. (IDFC), India’s biggest financier of public works, is selling $500 million (Rs2,050 crore) of shares to institutional investors, three people with knowledge of the matter said.
The sale, which began on Monday, will close on Wednesday and shares will be priced on 5 July, said the people, who declined to be identified before an announcement. The shares are being sold by auction or through book building, the people said.
“Several infrastructure projects will need large investments as India aims to increase its growth rate,” said R.K. Gupta, who manages Rs350 crore at Credit Capital Asset Management in Delhi and owns IDFC shares.
IDFC’s share sale follows a $5 billion offering by ICICI Bank Ltd, India’s biggest by market value, in June. The Mumbai-based company is raising money to meet demand for funds to build roads, ports and power plants in the world’s fastest growing major economy after China.
Citigroup Inc. and UBS AG are helping the lender sell the shares to banks, mutual funds, insurance companies and other big investors, according to a filing with the National Stock Exchange.
JM Financial Consultants Ltd and Kotak Mahindra Capital Co. are also involved in the sale, the filing said.
HDFC Bank Ltd, UTI Bank Ltd and State Bank of India also plan to sell shares to meet rising demand for loans. Indian companies and individuals took 28% more bank loans in the year ended 31 March, following lending growth of more than 35% in the previous two years, according to thecentral bank.
Bimal Giri, a spokesman for IDFC in Mumbai, declined to comment, as did James Griffiths, a Hong Kong-based spokesman for Citigroup Inc., and Mark Panday, a spokesman for UBS who’s also based in Hong Kong.
India’s economy grew at an average 8.6% in the past four years, the fastest in sixdecades.
The government aims to lift the annual growth rate to 10% by 2012, from 8.5% projected for the year to 31 March. The $854 billion economy is set to overtake South Korea as Asia’s third-largest this year.
India needs $320 billion in the next five years to improve inadequate infrastructure and support its booming economy, according to governmentestimates.
Highways, which move almost 80% of goods transported within India, account for about 2% of the nation’s 3.32 million km (2.1 million miles) of roads. It takes an average 85 hours to unload and reload a ship at India’s major ports, 10 times longer than in Hong Kong or Singapore, according to government figures.
IDFC, along with Citigroup and Blackstone Group Holdings LP, signed an agreement in February to start a $5 billion fund for investment in Indian roads, ports and otherutilities. Bloomberg