The London-based arm of India Infrastructure Finance Company Ltd (IIFCL) plans to draw at least $500 million this fiscal out of the $5-billion line of credit made available to it by the Reserve Bank of India.
IIFCL-UK is also likely to get a capital infusion of $50 million from its parent during the current fiscal. This transaction may be funded out of the Government's planned capital infusion of Rs 3,000 crore into IIFCL this year, Mr S.K. Goel, Chairman and Managing Director of IIFCL, told Business Line .
Set up as a wholly-owned subsidiary in 2008, IIFCL's London-based arm is currently capitalised at $50 million. The UK subsidiary provides foreign currency loans to Indian infrastructure companies for meeting their capital expenditure outside India.
Under the $5-billion line of credit arrangement, IIFCL could issue US dollar-denominated bonds with a tenure of ten years to the RBI. The bonds carry a coupon equivalent to the London interbank offered rate (LIBOR). The resources raised through the bonds issued to the RBI would be used to on-lend to Indian infrastructure companies for import of equipment towards infrastructure projects in India.
Till March-end 2011, IIFCL-UK has disbursed $624.63 million in five cases. The amount sanctioned stood at about $2 billion for 17 infrastructure projects.
With increased demand for foreign currency loans from private players, IIFCL is looking to hike its UK subsidiary's loan exposure limit for private sector players to 40 per cent from current 20 per cent.
Meanwhile, Mr Goel said IIFCL has sought the Government's nod for raising Rs 10,000 crore this fiscal through tax-free bonds. This bond offering would be mainly targeted at institutional investors who could invest in bonds with face value of Rs 10 lakh or more, Mr Goel noted. IIFCL may also raise about Rs 1,000-1,500 crore from retail investors through tax-saving bonds later this fiscal, he added.
IIFCL also plans to raise about $500 million from multilateral institutions such as the World Bank and Asian Development Bank this fiscal.
Takeout financing
Plans are afoot to undertake additional takeout financing to the tune of Rs 5,000 crore this fiscal. IIFCL has so far taken out Rs 1,563 crore of infrastructure loans under its takeout financing scheme.
IIFCL's takeout finance scheme, finalised in April 2010, is aimed at addressing the asset-liability mismatch faced by banks while lending to infrastructure sector.