Power sector lender Power Finance Corporation (PFC) today said it has approved a proposal to launch a private equity fund of $1 billion, which could possibly be in place over next 6 months.
"Our board has approved a proposal to launch a private equity fund and also given approval to select a partner for this fund, which will be of an overall $one billion," PFC Chairman and Managing Director Satnam Singh said after the board meeting held here today.
"Initially, we shall start with $300 million. The process that follows will be that we first select a partner for it, make a trust, make a asset management company (AMC), this may take around six months time," he said.
"We shall be contributing to the trust to the extent of 5%," Singh said.
"Our board meeting held here today has taken a call that we will go for a tender for selecting a partner for this private equity fund," Singh said.
"We specialise in lending to power projects but we do not have expertise in fund management. Therefore, we thought through synergy with partner's core competence in fund management, we can launch the fund jointly," he said.
"The tender to select an Indian partner for the fund shall be out soon," Singh said.
"For banking, we are in the process of advertising and are still looking to hire a consultant," he said.
PFC has entitlement for raising Rs 6,900 crore from Infra bonds, and 5,000 crore from tax-free bonds. So far, it has raised Rs 425 crore from tax-free bonds and Rs 90 crore from Infra bonds in first tranche, Singh said.
PFC, as part of Medium Term Note (MTN) programme has proposed to raise $one billion through External Commercial Borrowings (ECBs) which is expected to get over by December next year, a PFC's finance department official said.
"Our fund raising for -Infra and Tax free- shall get completed by March 2012 end," Singh said.