IL&FS, LIC to float $2-bn infrastructure debt fund

IL&FS Financial Services Ltd (IFIN) and Life Insurance Corporation (LIC) will set up an infrastructure debt fund with a targeted corpus of $2 billion.

LIC will pick up 10 per cent stake in the asset management company floated by IL&FS, the infrastructure development and finance company headquartered here. IFIN will hold 75 per cent stake. “We will use the trust structure for this venture,” said Ramesh Bawa, managing director and chief executive of IFIN. “It has flexibility to investment in projects from day one of implementation.”

The fund will be set up in compliance with the Securities and Exchange Board of India norms. IL&FS has targeted to start the operations from October. It has inked a pact with LIC for the fund.

The state-owned life insurer is also associated with funds floated by IDBI and IIFCL. These funds are yet to start operations.

IFIN, through its group companies, expects to raise contributions from both international as well as domestic investors to the tune of $1 billion.

Over 51 per cent of the contribution would come from international investors. Bawa said the AMC may give up to 15 per cent stake to the international investors. Discussions on the matter are on with prospective investors, including multilateral agencies and a Japanese firm. Besides power, ports and road projects, IDF may also look at healthcare and education projects, Bawa added.

LIC makes long-term investments into equity and debt instruments. It has invested in various infrastructure companies for facilitating long-term growth in the sector. As part of this activity, LIC has invested in the equity share capital of the 1987-founded IL&FS, parent of IFIN.

It is the largest equity shareholder in IL&FS with a stake of 25.9 per cent.