Citi, Blackstone, others tie-up for $5bn infra fund

US-based Citi Group and Blackstone today joined hands with infrastructure finance companies IDFC and IIFCL to set up a $5 billion (Rs 22,000 crore) corpus to fund the India Infrastructure Financing Initiative.

According to government estimates, infrastructure development in the country requires $320 billion in the next five years.

The India Infrastructure Financing Initiative will have equity and quasi-equity of $1 billion and $3 billion long-term debt recpectively.

As per an agreement, that was inked today by the four entities in the Finance Ministry, the equity financing programme will be managed by IDFC and the fund will be invested in greenfield, brownfield and operating projects.

Debt financing will be channelled through IIFCL, in several tranches over the next three years for projects appraised by IDFC, certain banks and financial intermediaries.

IDFC, Citi and Blackstone will together invest $250 million while the balance is expected to come from reputable international investors as well as select domestic institutional investors, including IIFCL.

Finance Minister P Chidambaram said: "This initiative is an important milestone in our search for innovative solutions to meet the vast challenge of financing the development of India's burgeoning infrastructure sector."

"We expect to raise equity over 18 months, mostly abroad. The process will be launched in a couple of weeks. It will be deployed in core infrastructure including roads, airports, ports, transport and logistic supply, power and gas pipeline," Rajiv Lall, managing director, IDFC, said.