ICICI-led infra debt fund launched

Four financial institutions, led by ICICI Bank, today launched a $2 billion (about Rs 10,000 crore) Infrastructure Debt Fund (IDF), which would finance its first project by the end of next month.

“This is the first IDF in the form of NBFC and will commence operations very soon. The capital of Rs 300 crore has been contributed,” ICICI Bank CEO and Managing Director Chanda Kochhar said.

Besides ICICI Bank, the other sponsors of the India Infra Debt Ltd are Bank of Baroda (BoB), Citi and LIC. The ICICI group has 31 per cent, BOB — 30 per cent, Citi — 29 per cent and LIC — 10 per cent.

After the formal launch of the fund by Finance Minister P Chidambaram here, Kochhar told PTI that the company, India Infra Debt Ltd (also known as Infradebt), is looking to raise half the corpus from the domestic market and the other half from foreign sources.

Talking about the fund flow to the IDF, Kochhar said: “The structure is that after Rs 300 crore equity capital, it can then raise tier 2 capital, it can raise further funds in the form of debt and it will look at all those infrastructure projects that have completed implementation.”

Projects have been identified which have completed minimum one year of operation, she said, adding that the first deal will be made by the end of the current fiscal.

This fund can finance projects of up to $2 billion, Kochhar added, exuding confidence that IDFs can emerge as additional channels for infrastructure funding.

Speaking about the IDF, CEO of Citi India Pramit Jhaveri said: “There are large pools of global and domestic capital looking for attractive investment prospects. India Infradebt is a unique platform to match these funds and their appetite for long term and stable investments with the compelling India infrastructure opportunity.”

Concerned over poor infrastructure, the government last fiscal allowed to form IDF to step up investment in the infrastructure sector, which requires $1 trillion in the 12th Plan. Of the total proposed investment, about 50 per cent is expected to come from the private sector and the debt contribution is expected around $350 billion.

“The share of private investment in the total investment in infrastructure has increased significantly from 22 per cent in the 10th Plan to 38 per cent in the 11th Plan and is projected at 47 per cent during the 12th Plan,” the Finance Minister said.

To mobilise the resources of this level, Chidambaram said that many more institutions are required to share this responsibility.


Source: thehindubusinessline