India Infrastructure Finance Looking To Diversify Into AIFs In FY25, Says MD
The company would prefer to set up AIFs in GIFT City, as it would allow for sourcing from domestic and global investors, Managing Director PR Jaishankar said.
India Infrastructure Finance Co. is looking to diversify into alternative investment funds in its GIFT City branch in fiscal 2025, according to Managing Director PR Jaishankar.
The strategy for the AIFs was already developed and approved by the board and only needs implementation, he told NDTV Profit. "We are already evaluating various options and we won't be surprised if it happens in H1 (the first half of the fiscal), as we are hoping to operationalise it this financial year," Jaishankar said.
The company would prefer to set up the AIFs in GIFT City, as it would allow for sourcing from domestic and global investors, he said. "IIFCL wants to play the sponsor and we want the first AIF to be a green AIF and then, ideally, a string of AIFs supporting specialised sectors, with different investment managers and project managers for the entire set of assets and investments."
Going forward, this would be a very good architecture for infrastructure lending, according to him.
IIFCL—which is wholly owned by the government—posted positive financials for FY24 earlier this week, with the highest-ever profitability, sanctions, and disbursements in its four-year-long turnaround trajectory, with Jaishankar at the helm.
It reported a 44% rise in net profit to Rs 1,552 crore in FY24 and attributed it partly to lower non-performing assets, with the net NPA ratio falling to 0.46% in FY24 from 1.41% in FY23.
In FY25, the company is looking to raise more resources, achieve a 20% CAGR over the next three years, and aim for zero net NPAs.
A part of this resource-raising exercise would be through green bonds as well.
"This year, the quantum of funds we are looking to raise is Rs 30,000 crore and a part of it will be for green finance, and whether it would be domestic or global markets, that would depend on pricing, but not less than Rs 3,000 crore," Jaishankar said.
The company is also considering a larger basket of resources, including extra commercial borrowings, to achieve this.
"With a sanction of Rs 42,000 crore and outstanding loans of about Rs 52,000 crore, we are looking at growth with a CAGR of 20%. This requires a basket of resources and that depends greatly on cost-effectiveness and term structures," Jaishankar said. "...ECB is an important part of the basket. We already have multiple currencies in our borrowing portfolio."
The company, he explained, is looking at the most effective and efficient way of adding to its resources and ECBs can offer lessor tenors, easier access, and speedier borrowing.
"Simultaneously, our relationship with multilateral banks will continue and ECB through multilaterals will be a mainstay for IIFCL even in the future," he said. "At the same time, in terms of domestic borrowings, we have been (among) few frequent issuers and we would like to increase that frequency. We are looking at the stability in interest rates and conduciveness of domestic markets for our demands."
The company is also expected to be IPO-bound. However, the stake is to be diluted and its tentative date remains under wraps.
Infrastructure lending architecture is poised to undergo a tremendous change. InvITs and bonds would play an important role in the area of infrastructure financing, the MD said.
"IIFCL has always been a leading innovative infrastructure lender. Now, we want to add to it and become the preferred leading innovative infrastructure lender," he said.
