IDFC to raise $500 million by July

Infrastructure Development Finance Co, an Indian financier of public works, may begin raising the equivalent of $500 million in rupees within weeks of getting shareholder approval on June 28 to lend to projects in an economy that's grown 8.6 per cent a year since 2003.

The company plans to sell equity and bonds convertible into shares, managing director Rajiv Lall said in an interview. The timing of the sale would depend on the market conditions and the bonds would be convertible into shares within 18 months, he said.

"One could expect good demand for shares of infrastructure financing companies that have lent to projects which are value accretive,'' said Prateek Agrawal, who manages $203 million as head of equities at ABN Amro Asset Management India in Mumbai.

India needs $320 billion over five years to improve its inadequate infrastructure including roads, ports and electricity generation in order to expand the $854 billion economy, the government estimates.

IDFC yesterday said it gave Rs 7200 crore ($1.76 million) in loans to 109 projects in the year ended March 31, compared with Rs 6000 crore a year earlier.

The lender's shares have almost tripled since it raised Rs 1370 crore in an initial sale in July 2005. The benchmark Sensex index almost doubled during the same period.

The stock traded Rs 5.5, or 5.5 per cent lower at Rs 98 on the Bombay Stock Exchange.

The funds will be raised through "a mix of equity and some convertible structure," Lall said. "Whatever the instruments are, they will all convert into equity in 18 months."