NEW DELHI: The U.S.-based Citi Group and Blackstone on Thursday joined hands with Infrastructure Development Finance Company (IDFC) and India Infrastructure Finance Company Limited (IIFCL) to set up a $5 billion corpus to finance infrastructure development in India, which requires a massive $320 billion in the next five years.

The India Infrastructure Financing Initiative will have equity and quasi-equity of $1 billion each and $3 billion long-term debt.

As per an agreement, that was inked by the four entities in the Finance Ministry, the equity financing programme will be managed by IDFC and the fund will be invested in both greenfield and brownfield projects. Debt financing will be channelled through IIFCL in several tranches over the next three years for projects appraised by IDFC, certain banks and financial intermediaries.

Finance Minister P. Chidambaram said: "This initiative is an important milestone in our search for innovative solutions to meet the vast challenge of financing the development of India's burgeoning infrastructure sector.''

IDFC, Citi and Blackstone will together invest $250 million and the balance is expected to come from reputable international investors as well as select domestic institutional investors, including IIFCL.

IDFC Managing Director Rajiv Lall said: "We expect to raise equity over 18 months, mostly abroad. The process will be launched in a couple of weeks. It will be deployed in core infrastructure including roads, airports, ports, transport and logistic supply, power and gas pipeline.''

IDFC Chairman Deepak Parekh said infrastructure for the country required a large sum of money. "This money is not available in the domestic market. So we need to raise money abroad so that big power projects, which require up to Rs. 20,000 crore each, can be financed,'' he said. The idea was to act as a catalyst for infrastructure financing although there were limits to which a particular project could be financed, Mr. Lall said.

Mr. Parekh said the fund was the outcome of India-U.S. CEO Forum's initiatives and other funds to develop infrastructure in India could be worked out in Japan and West Asia as well.

PTI

Printer friendly page  
Send this article to Friends by E-Mail