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Informist, Friday, Nov. 22, 2024

 

By Priyasmita Dutta and Sagar Sen

 

NEW DELHI - To expand its investor base and lower the borrowing cost, India Infrastructure Finance Co. Ltd. is currently in discussion with Asian Development Bank and Korean Exim Bank for blended finance to the tune of $600 million, Managing Director P.R. Jaishankar said Friday. The discussions are in advanced stage and the agreement may be signed in December, Jaishankar told Informist. 

 

The blended finance line will be interlinked between the two financial agencies and will be released to IIFCL on meeting certain goals, another official said. According to Organisation for Economic Co-operation and Development, blended finance refers to the strategic use of development finance and philanthropic funds to mobilise private capital flows to emerging markets.

 

While IIFCL has the appetite to borrow the entire $600 million at one go, Jaishankar said that availability of that much funds is contingent on the lending agency and so around $200 million may come through this fiscal while the remaining may come in only in 2025-26 (Apr-Mar). "As far as our appetite is concerned, we can go beyond $600 million. So we can immediately raise all $600 million also, given lenders are able to provide us."

 

Besides raising funds through blended finance, Jaishankar also said that the infrastructure financier will likely raise $200 million through external commercial borrowings by January. "We are in touch with ADB, World Bank and Japan International Cooperation Agency for fund raising via ECB route," he said.

 

"The intent of overseas borrowings strategy is to ensure cost-effectiveness and long-term money. We are looking at 20-25 year tenor funds from multilateral resources," the managing director said. So far, IIFCL has raised 50 billion yen from JICA, $1,900 million from ADB and $195 million from World Bank. 

 

Additionally, the government has given nod to IIFCL to raise funds through overseas green bonds, Jaishankar said. If we get the right premium and pricing for green bonds, we will go for that. Because we have enough sustainable projects, our appetite is very big for sustainable projects," he said.

 

These overseas borrowings are part of IIFCL's INR 290 billion borrowing plan for FY25. Of this, Jaishankar said that the state-owned financier aims to raise INR 30 billion-INR 40 billion through external commercial borrowings. 

 

The infrastructure financier's diversified borrowing portfolio is aligned with the company's intention to consolidate its business. For FY25, Jaishankar said that the company has set an internal target of sanctioning loans worth INR 450 billion and disbursing loans worth INR 225 billion. In Apr-Sept, the company disbursed loans worth INR 100.21 billion, while sanctioned loans worth INR 217.35 billion.  End

 

US$1 = INR 84.44

 

Edited by Akul Nishant Akhoury

 

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