IDFC to raise $179.3m from Actis, Khazanah

The emerging markets specialist and the Malaysian sovereign wealth fund will invest INR8.4bn in the infrastructure company, which has also raised an additional INR26.5bn from other investors in a qualified institutional placement.

India’s Infrastructure Development Finance Company (IDFC) will raise INR8.4 billion ($179.3 million; €141.6 million) from emerging markets private equity specialist Actis and Malaysian sovereign wealth fund Khazanah.

The company is now approaching shareholders to seek their approval to raise this amount of capital from Khazanah and Actis, it said in a filing with the Indian stock exchanges. The two firms will be issued and allotted compulsorily convertible cumulative preference shares in the company.

Late last month, IDFC disclosed it would raise up to a total of INR35 billion through a share sale to domestic and international institutional investors. Yesterday, the company successfully allotted 157,752,090 equity shares to qualified institutional buyers at INR168.25 per share, raising INR26.54 billion in the process. If approved, the capital injection from Actis and Khazanah will bring it to its fundraising target.

The Indian Ministry of Finance will see its stake in IDFC fall to about 17 percent from the current 20.1 percent following the capital raising, but will still remain the company’s single largest shareholder, Vikram Limaye, executive director of IDFC, told India’s CNBC-TV18 in an interview. The total equity dilution from the INR35bn capital raise will be about 14.5 percent, he added.

Providing a rationale for the capital expansion, Limaye told the news channel that over the next three to four years “the opportunity landscape for infrastructure is quite robust” and a lot more attractive than what the company has seen over the last two to three years. Furthermore, infrastructure project sizes have also “doubled and tripled” since then, he said.

Prior to this fundraising exercise, Khazanah had a stake of 8.97 percent in IDFC. Its stake in the company will be maintained at about the same level, while Actis, a new investor in the company, will own a stake of about 1.7 percent in the company, according to the Economic Times.

In April, Actis announced it was teaming up with Indian conglomerate Tata to invest a combined $200 million in a joint venture vehicle targeting Indian road and highway project work worth an aggregate total of $2 billion.

IDFC Private Equity, India's largest infrastructure-focused private equity manager with around $1.4 billion in funds under management, is fully owned by IDFC. The company also recently set up IDFC Real Estate Investments, a private equity real estate funds management business, and hired Chetan Davé, the former managing director and chief executive of SUN-Apollo, to head the unit.