IDFC to raise $500 mn via QIP route

The Infrastructure Development Finance Company (IDFC), the nation's biggest infrastructure lender, has roped in Citigroup, UBS, Kotak Mahindra and JM Financial, to raise $500 million through share issuances to foreign and domestic institutions early next month.

This will be the biggest ever fund mobilisation through the Qualified Institutional Placement (QIP) route, after GVK Power & Infrastructure's $300 million, handled by Kotak Mahindra, Citigroup and SSKI, and the $240 million issue by Max India, which was lead managed by CLSA.

IDFC's roadshows for the QIP issue will start in the first week of July, said sources close to the development. The funds will be used to meet the growing demand from companies and the government to build ports, roads, power projects and other utilities.

In the last eight months, 18 firms have raised more than Rs 4,500 crore ($1.09 billion) through the QIP route.

When contacted, an IDFC spokesperson said: "In the last board meeting, we have approved a $500 million fund mop-up via the QIP route. However, the approval of shareholders is pending, which is likely to come in the annual general meeting on June 28."

"We would be utilising the funds for lending to infrastructure projects and for our next 2-3 years' growth plans," he added.

QIPs, which was introduced by the Securities and Exchange Board of India (Sebi), are considered portfolio investments, aimed at helping companies to raise funds by selling shares to foreign institutional investors registered with the Sebi.

In 2005-06, IDFC accounted for a quarter of all private sector-focused infrastructure project financing in the country. As on December 31, 2006, IDFC's balance sheet size was Rs 16,377 crore and as on March 31, 2006 on a cumulative basis, IDFC has approved financial assistance to 162 projects aggregating over Rs 17,530 crore.

Its subsidiary IDFC Private Equity, manages the infrastructure focused private equity fund with a corpus of Rs 2,744 crore. A couple of months back, IDFC, Citigroup, India Infrastructure Finance Company and Blackstone announced the launch of "The India Infrastructure

Financing Initiative" to deploy around $5 billion in capital for infrastructure projects in India. The plan is to deploy about $2 billion in equity capital and $3 billion in long-term debt financing with maturities exceeding 10 years.