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“This is the first IDF in the form of NBFC and will commence operations very soon. A capital of Rs 300 crore has been contributed,” said ICICI Bank’s CEO and Managing Director Chanda Kochhar.
ICICI Bank (together with a wholly-owned subsidiary) is the largest shareholder in the IDF with 31 per cent holding, followed by Bank of Baroda at 30 per cent, Citibank at 29 per cent and Life Insurance Corporation at 10 per cent.
The IDF would seek to raise debt capital from domestic as well as foreign resources and invest in infrastructure projects under the public-private partnership model that have completed a year of operations. It will expand and diversify the domestic and international sources of debt funding to meet the large financing needs of the infrastructure sector.
Infrastructure spending in the 12th five-year Plan is projected at $1 trillion against about $500 billion in the 11th Plan. The share of private investment in the total investment in infrastructure has increased significantly from 22 per cent in the Tenth Plan to 38 per cent in the Eleventh Plan and is projected at 47 per cent during the Twelfth Plan.
To mobilise resources of this tune, Chidambaram said many more institutions were required to share this responsibility. He asked the promoters of India Infra Debt to provide sound management to make these projects successful. He said financing investments of this order, with significant participation from the private sector will require adoption of innovative ways of financing.
The government is hopeful that the cost and rates of infrastructure services would go down as a result of low-cost long-term debt provided by IDFs.
Earlier this month, IL&FS Financial Services Limited had launched IL&FS Infrastructure Debt Fund through the mutual fund route. It seeks to raise an initial corpus of Rs 1,600 crore for investments across an array of infrastructure projects.
IDFs were announced in Budget 2011-2012 with an aim to facilitate the flow of long-term debt into infrastructure projects. IDFs can be set up either as a trust or as a company. A trust-based IDF is normally a mutual fund, while a company based IDF is an NBFC.
IDF mutual funds are regulated by the Securities and Exchange Board of India, while IDF NBFCs are regulated by the Reserve Bank.
