Mumbai:
Union
finance minister P Chidambaram launched IL&FS Infrastructure Debt Fund,
which seeks to raise an initial corpus of Rs 16 billion for investments across
an array of infrastructure projects.
It is
targeted to achieve a second close with a corpus of Rs 5000 crore. The IIDF
will be a Close ended or interval Scheme with maturity of not less than 5 years
and not greater than 15 years. Along with LIC, Hamen FII from Hong Kong has
invested in the fund.
Addressing a
gathering of top bankers and fund managers in Mumbai, Chidambaram said the
anticipated investment on infrastructure projects in the country is $1
trillion; half of which will have to come from the private sector. He said,
India urgently needs to build world class roads, railways and port network to
put the economy on high growth path. “Large funds, in the form of pension funds
and wealth funds from abroad are interested in investing in India. We need to respond with better project
execution with no time and cost over runs” he added.
Advocating a
fresh perspective on funding long-term infrastructure projects, Chidambaram
said, the debt funds, like IL&FS Debt Fund would step in after the project
has crossed the regulatory stage and taken off. It will take over the loans and
advances given by banks and lend at a lower cost on most occasions for the rest
of the projects life. Chidambaram appealed to the bankers to change their mind
set on lending to long-term projects and said “here I call upon the Bankers to
recognize the complimentality of loans, realize their money – with some capital
gain perhaps, and let the debt funds finance the projects”.
Finance
Minister said the Infrastructure Debt Funds add more depth to the market, help
raise more money and also bring down the cost of financing in the long run.
IL&FS Infrastructure Debt Fund proposes to raise Rs 5,000 crores and would
invest primarily in projects in the field of power, port, roads and also
healthcare and education sector.
The
allocation of the assets will be governed by SEBI regulations with atleast 90
per cent of the assets being allocated to investment in debt securities or
securitized debt instruments of infrastructure companies, projects or
infrastructure SPVs or bank loans in respect of completed and revenue
generating infrastructure projects and the balance upto 10 per cent of the
corpus in a mix of instruments including mezzanine financing instruments of
companies engaged in infrastructure development projects, whether listed on a
recognized stock exchange in India or not, Money market instruments (including
CBLO, Reverse Repo, CD/CP and T Bills) and bank deposits as permitted under the
Regulations.
IL&FS
Financial Services Limited has established a 100 per cent subsidiary, IL&FS
Infra Asset Management Company Limited (AMC). The proposed IL&FS
Infrastructure Debt Fund would be managed by the above AMC
Ravi
Parthasarathy, Chairman-IL&FS Group said, “It is a very proud moment for
IL&FS Group to have launched IL&FS Infrastructure debt fund. This is a
step forward in our continued efforts to drive India’s infrastructure growth
story to the next level.”
Ramesh Bawa
Managing Director and CEO, IL&FS Financial Services Limited said, “The
government had stressed on the need for the infrastructure debt fund in the
last Union Budget and it gives me immense pleasure to announce the launch of
the IIDF fund.”
IL&FS
Financial Services Limited (IFIN) is the investment-banking arm of the
IL&FS Group with a strong client base and provides end-to-end financial
solutions including project finance advisory & syndication, financial
structuring and equity placements. IFIN is very active in mobilizing project
and corporate debt and equity for India Centric initiatives
IFIN has a
strong presence in domestic financial markets with strong relationships with
Indian Financial Institutions, Banks and Insurance Companies. Huge investments
are needed in India in both the Infrastructure sector and Manufacturing sector,
to make India more competitive. In this context, India is a capital deficient
economy and therefore it is important to supplement domestic resource pools
with international pools of capital
Towards this
direction and objective IFIN intends to strengthen its international network of
financial partners and currently has overseas presence in London, Singapore
Hong Kong and Dubai.
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