First Infrastructure Debt Funds : ICICI, LIC, Citicorp, BoB launched

Mrs. Chanda Kochhar, MD, ICICI Bank

India's Banking &  financial services giants like ICICI Group, LIC of India (Life Insurance Corporation), Citicorp Finance India and BoB (Bank of Baroda) — on recently joined hands to launch India's first IDF (Infrastructure Debt Fund) to be structured as a non-banking finance company.

$ 200 crore Fund..!

The MoU (Memorandum of Understanding) for setting up this IDF was signed in the presence of the Finance Minister, Mr Pranab Mukherjee, and the Planning Commission Deputy Chairman, Mr. Montek Singh Ahluwalia, in the Capital Delhi.

Mrs. Chanda Kochhar, MD, ICICI Bank, said, ''This company will have an initial equity share capital ( tier-I ) of Rs. 300 crore. Taking into account the tier - II capital &  the ability to borrow, it can set up a fund of nearly  $ 200 crore. The funds will be invested in PPP (Public - Private Projects) in ports, railways, roads, highways & other such infrastructure projects, which have already commenced commercial production. Implementation risk will hardly be there &  that will be the investment profile of this fund.There is also scope to attract FIIs (Foreign Institutional Investors) in the debt part of the fund. "

Mr. Pramit Jhaveri, CEO, Citi India said, “The Indian banking sector by itself will simply not be able to finance India's infrastructure needs. Our IDF will have an extraordinary opportunity to act as a catalyst to channelise domestic savings and global liquidity to create an alternate pool of capital. We expect to attract capital from both domestic & international debt investors alike”

Equity Contribution..!

As for the equity contribution, ICICI Group will take 31% stake, Bank of Baroda 30%, Citicorp Finance India 29% and LIC of India 10%.
While ICICI Bank will take a stake of 30%, an ICICI Group entity will take the other 1%. Citicorp Finance India is a 100% owned entity of Citigroup.

The IDF managers would not only have expertise in infrastructure finance, but also the ability to access domestic & global funds.

It will attract participation from entities that have so far not participated in the infrastructure development of India - long-term insurance and pension funds domestically & globally and many other global funds, including sovereign wealth funds.

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