Indian firms raise $93m for infra debt

India’s first infrastructure debt funds under the NBFC structure start ball rolling on takeout financing.

Two Indian infrastructure debt funds (IDFs) have raised Rs 550 crore (€68 million; $93 million) between them from the bond markets, the first such fundraising by debt funds via the non-banking finance company structure (NBFC), as reported in Indian daily The Economic Times on Monday.

India Infradebt, India’s first infrastructure debt fund conceived more than three years ago under the NBFC structure, has raised Rs 300 crore ($50 million) and plans to raise Rs 3000 crore ($507 million) in the next two years.

A second fund called L&T Infrastructure Finance has also raised Rs 250 crore ($42 million), The Economic Times reported. Both firms were not available for comment by press time. 

The IDF and NBFC structures allow foreign investment in Indian infrastructure loans. Both structures aim to help Indian banks by taking out infrastructure loans from them. The IDFs provide medium term loans to the banks against the banks’ long-term infrastructure exposure and enable the banks to tap institutional investors for long-term funding through the NBFC.

The takeout financing programme has been designed to help banks in correcting their asset liability mismatch, as Indian banks have little access to long-term money.

India Infradebt is a joint venture between ICICI Bank, Bank of Baroda, Citicorp Finance and Life Insurance Corporation of India. Its chief executive Suvek Nambiar told ET that there was good appetite for triple-A rated bonds floated by IDFs. It has raised funds for five years and 10 years at 9.7 percent, about one percentage point above the prevailing yield on 10-year government securities. L&T Infrastructure Finance has reportedly sold bonds with similar maturities at 9.6 to 9.7 percent.