India Infrastructure Finance Company (IIFCL) today said it will launch a USD one billion infrastructure debt fund, for which final approval from market regulator Sebi is expected soon.
"We have got an in-principle approval from Sebi for our USD 1 billion Infra debt fund...all the formalities have been complied with and now it is in final stages of approval with the regulator...We expect it to be approved soon," IIFCL Chairman and Managing Director S K Goel said.
"We want at least 50 per cent of this fund (USD 500 million) to come from Foreign Institutional Investors (FIIs), and we are in talks with Asian Development Bank (ADB), HSBC and Barclays, among others, for the purpose," he said.
Meanwhile, in a bid to develop bond market in India, the infra space lender has proposed to launch a new scheme - Credit Enhancement - in assistance with the Asian Development Bank from January next year.
"The scheme would facilitate launch of bonds by the private developers, on guarantees backed by IIFC, having due insurance cover from ADB," a company official said.
"The first bond, through this credit enhancement scheme, by a private developer group, GMR, is expected to hit the markets in January," Goel said.
IIFC, a wholly owned GoI company, was formed through a special arrangement, to promote infra sector by offering long term loans (25-30 years), is gearing up to meet the investment projections.
IIFC has acquired 41 per cent equity in Delhi Mumbai Industrial Corridor Development Corporation (DMICDC), nodal agency for Delhi Mumbai Industrial Corridor (DMIC), in which infra projects of USD 90 billion are expected to come up across six states.
IIFC's UK-based subsidiary has USD 5 billion credit line from RBI to provide loans in foreign currency to infra projects in India.
"RBI had given us a USD 5 billion credit line, and we opened a subsidiary in London, India Infrastructure Fund Company(IIFC)-UK from where we are disbursing foreign currency loans at cheap rates like London Interbank Bank Offer Rate (LIBOR) plus 200 basis points," Goel said.
"So far IIFC UK has disbursed up to USD 1 billion loans," he said.
The interest spread of IIFC, difference between borrowing cost and lending rate, stood at 2.80 per cent. It's total borrowings stood at around Rs 22,000 crore.
IIFC has sanctioned Rs 71,000 crore up to September 30, 2012, of which Rs 26,000 crore has been disbursed.
"Our disbursement target for infra projects by March 2013 is Rs 30,000 crore," Goel said.
Meanwhile, the company is also planning to raise Rs 1,500 crore through its tax free bond issue with a green shoe option up to the shelf limit of Rs 9,215 crore on first-come first-serve basis.
The issue will open on December 26 and closes on January 11. Retail investors shall get 50 basis points higher return compared to other categories like QIB, HNI and corporates, Goel said.
For retail investors, the bonds carry a coupon rate of 7.69 per cent for 10 years, 7.86 per cent for 15 years and 7.90 per cent for 20 years.