Power Finance Corporation is keen to invest `100 crore into the proposed $1 billion infrastructure debt fund being floated by Indian Infrastructure Finance Company Ltd (IIFCL), according to sources familiar with the development.
“SEBI has already accorded approval to IIFCL for launching the fund. Within the infrastructure sector, we are still evaluating whether the debt fund should be focused towards power,” an IIFCL official told Express on condition of anonymity. He added that PFC has already taken the proposal for investing `100 crore for the approval of its board. “It is in advanced stages of talks as they are quite serious about the investment,” he said.
The govt-owned financing institution is also in talks with two-three public sector banks to raise funds for the debt fund. After many delays, IIFCL has now decided to launch the fund by middle of next month. IIFCL has already missed its earlier three deadlines of launching the fund. It had initially planned to launch the fund in February and then in April as it was in talks with Asian Development Bank for getting commitments for the fund.
Following that, it had further pushed the deadline for operationalising the fund by end of July. It was not able to adhere to that deadline too as market regulator Sebi had not given its approval to it.
ADB is one of the investors in the fund, which is expected to address the long-term funding needs of the infrastructure sector. Set up in January 2006 under the aegis of the Finance Ministry, IIFCL was set up for funding long-term infrastructure projects in India. It funds projects relating to roads and bridges, railways, ports, airports, inland waterways, power, urban transport, water supply, sewage, solid waste management, gas pipelines etc. Till March 31 this year, it had sanctioned loans totalling `585.68 billion for 267 infrastructure projects.
Of the $1 billion required for the fund, nearly 50% would be raised from domestic FIs with the balance coming from overseas foreign investors. Besides ADB, other investors include HSBC, IDBI Bank and LIC. While LIC and IDBI Capital would have 10% and 14% stakes respectively in the fund, IIFCL will have 26%. Both ADB and HSBC will have a combined 50% stake in the fund.