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New Delhi – State-run India Infrastructure Finance Co. plans to tie up with Barclays PLC, HSBC Holdings PLC and the Asian Development Bank, among others, to float a $1 billion debt fund by the end of April to finance local infrastructure projects, its chairman said Tuesday.
“Barclays and HSBC are likely to contribute together about $300 million for a [total] 30% stake while the ADB will give about $200 million for a 20% stake,” S.K. Goel said.
While IIFCL will hold a 26% stake in the proposed fund, IDBI Bank Ltd. will hold 14% and state-run Life Insurance Corporation of India the remainder 10% in the debt fund, he added.
The proposed fund is one of India’s initiatives to fix its shabby infrastructure that analysts often blame for shaving off nearly two percentage points off the country’s annual economic growth pace. Economists estimate that nearly 40% of fruits and vegetables produced perish before reaching the markets due to clogged ports and potholed roads and that chronic power outages crimp factory output.
Asia’s third-largest economy aims to spend $1 trillion in the five years to March 31, 2017, to boost its infrastructure, necessary to help meet a medium-term aim of 9% annual economic growth.
Mr. Goel said that IIFCL, whose loan book is likely to reach about 250 billion rupees ($5.1 billion) by March, expects the government to approve its proposal this month to raise 100 billion rupees through tax-free bonds next fiscal year starting April 1.
“We did a tax-free bond issue of 100 billion rupees in 2009 and we would like to go for another 100 billion rupees again as there is quite a good demand,” he said.
The financial institution will also sell 10 billion rupees worth of 10- to 15-year bonds by March 31.
Mr. Goel also said that the company will buy a 41% stake in Delhi Mumbai Industrial Corridor Development Corporation from a private firm, as proposed by the federal government.
The Delhi-Mumbai industrial corridor, which India will develop with Japanese assistance, would include building several cities on either side of the 1,483 kilometers of a dedicated rail freight corridor between Dadri, near Delhi, and Jawaharlal Nehru Port Trust in Navi Mumbai.
The government holds a 49% stake in Delhi Mumbai Industrial Corridor Development Corp., which is executing the project.
Source: Dow Jones Newswires
