The World Bank’s investment arm International Finance Corporation (IFC) has been investing in India for over 60 years, helping companies with capital and debt and advising states and the Centre on investments in building power plants, bridges, ports and financial services. IFC, which now advises India’s low-income states like Rajasthan, Orissa, Meghalaya and Bihar, said it will invest $20 million in Pragati India Fund, which will focus on investing in small and medium comapnies in these states. IFC’s South Asia director Thomas S Davenport says it will invest $1 billion in India despite policy challenges and regulatory constraints. IFC, which had invested in India’s first ultra mega power project in Mundra, is also keen on investing anywhere between 15% and 20% of the $1-billion infrastructure fund it plans to raise in few months in Indian companies. Davenport spoke to FE’s Baiju Kalesh and Shruti Ambavat on the way ahead. Excerpts:
The political environment is a concern for many investors. How did IFC’s strategy change over the years?
IFC has been in the market since the late 1950s and we have developed very strong relationships with a lot of the blue chips over time. Our role is to have a developmental impact and target markets that are new and emerging.
It is typical of many PE firms, so how is your strategy different?
We have a significant risk appetite to make sensible investments. We are here for the long term. We have a responsibility towards shareholders and governments and we are catering to it. Two years ago, we defined our strategy, which focuses on infrastructure, renewable energy, financial inclusion and global integration. These are part of our advisory strategy as well. In the advisory, we work on investment market as well as private public participation projects.
India slashed its growth rate and several policy issues are hampering investments. Your view?
One shouldn’t ignore the fact that India is still looking at above 7% growth. We are still very optimistic and positive in select sectors. We are going to invest $1 billion in India this year and have a very promising pipeline for next year as well. We are still seeing lot of good investment opportunities in this market.
Which are the sectors you will look to invest in?
We see good opportunities in power distribution and transmission and renewable energy.We are looking at a ports project right now. We also have strong environmental social standards, so we need companies