Stage set for IIFCL debt fund launch next month

With the Manila-based Asian Development Bank yet to give its formal consent as one of the co-investors for the $1 billion infrastructure debt fund being floated by Indian Infrastructure Finance Company Ltd (IIFCL), the government-owned financial institution has pushed the deadline for operationalising the fund by end of July.

“We have already filed the papers for the debt fund with SEBI. The approval from the market regulator should come in another 8-10 days,” IIFCL Chairman and Managing Director S K Goel told TNIE.

Once IIFCL gets the nod from SEBI, he said the fund is likely to be launched by July 31. IIFCL has already missed its earlier two deadlines of launching the fund in February and then in April as it was in negotiations with ADB for getting commitments for the fund.

ADB is one of the investors that IIFCL is in talks for raising capital for 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 financing long-term infrastructure projects in India. Till March 31 this year, it had sanctioned cumulative loans totalling `585.68 billion for 267 infrastructure projects.

Of the $1 billion required for the fund, nearly 50% would be raised from domestic financial institutions with the balance coming from overseas foreign investors. Besides ADB, other investors in the fund include HSBC, IDBI Bank and Life Insurance Corporation of India.

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 total of 50% stake.

IIFCL was earlier planning to launch the fund through the NBFC route but later chose the vehicle of mutual fund as SEBI guidelines were more flexible.