IDFC to raise Rs 1,200 crore debt

Majority likely to be from overseas

The Infrastructure Development Finance Company (IDFC) is expected to raise a little over Rs 1,200 crore through debt as part of its efforts to invest in the cash-guzzling infrastructure development in India. According to information available, this debt will be funded majorly through overseas financial institutions.

The decision to raise this debt comes close on the heels of IDFC's announcement to raise $500 million through a mix of various instruments including qualified institutional placement (QIP). The Board of the company recently also approved hike in FII shareholding limit to 74 per cent from the current 49 per cent.

According to information available, the proposed debt transaction will provide IDFC with longer maturities. The tenors of up to ten years will help IDFC lengthen the maturity of its liabilities to match longer tenor asset requirements.

Traditionally, IDFC has financed projects in the energy, telecommunications, integrated transportation and urban infrastructure sectors. More recently, IDFC has recognised the importance of food and agribusiness infrastructure to India's economy and the urgent need for massive investments in social sectors such as healthcare, education and tourism.

The company has almost over 40 per cent exposure towards energy sector and over 20 per cent exposure for transport sector. The balance sheet size of the company has grown by 50 per cent over the fiscal year 2006-07 to Rs 17,982 crore while loan book increased by 37 per cent to Rs 14,150 crore.

IDFC has almost Rs 3,000 crore of equity exposure in various projects from its current funds and is expected to raise a couple of more fund during this year. In addition to core sector funding, IDFC operates a private equity fund which has invested in a clutch of companies.

For the year ended March 31, 2007 IDFC has reported a net of Rs 504 crore, an increase of 29 per cent over the previous fiscal. Gross approvals at Rs 13,053 crore (Rs 10,631 crore) for 105 projects reflected an increase of 23 per cent from the year-ago period, while gross disbursements of Rs 7,207 crore (Rs 6,045 crore) for 109 projects were higher by 19 per cent. The net interest income of Rs 428 crore reflected an increase of 40 per cent over FY 2006.