India topped project finance deals in 2009

SBI Caps heads global loan chart; power sector dominates.

A study ranked India on top in the global project finance market in 2009, ahead of Australia, Spain and the US.

The study, by Project Finance International (PFI), a source of global project finance intelligence and a Thomson Reuters publication, said the main market for project finance (PF) in 2009 was the domestic Indian market, which raised $30 billion (Rs 1.38 lakh crore), accounting for 21.5 per cent of the global project finance market. This was up from $19 billion in 2008.
 

THE BIG LEAGUE Top banks in project financing
Lead manager	Volume
SBI Capital	19,944.90
Calyon	7,359. 60

BNP Paribas5,836.10 Societe Generale4,283.70 Sumitomo Mistusi Fin 4,025.10 IDBI Bank3,989.20 Source: Project Finance International
Figures in $ million

Also, for the first time, investment bank SBI Capital Markets, a subsidiary of State Bank of India, topped the global loan chart, ahead of top French, British and US banks. Three French banks followed: Calyon, BNP Paribas and Societe Generale.

“The global project finance market was propped up in 2009 by government-linked projects such as social infrastructure and renewables and by the fact that 20 per cent of the market is in India, which surged to become the biggest and busiest market last year, toppling Australia from the previous year’ top position,” said PFI in its study.

It was not only SBI Capital Markets which was gaining attention in the loan market. Among other domestic loan arrangers, IDBI Bank was ranked second, Infrastructure Development Finance Company (IDFC) was ranked third and Axis Bank fourth in the Asia-Pacific region.

“At IDFC, our focus will be domestic markets only and given the size of opportunities in India, we would still further grow our operations here,” said Vikram Limaye, executive director at IDFC.

Given the credit crunch and the fall of major banks in the West, the global PF figures were not as robust as in the previous couple of years. According to PFI data, globally, the PF loan figure stands at $139.2 billion in 2009 compared to the staggering $250 billion in 2008 and $220 billion in 2007. Adding the figures for project bonds at $8.2 billion, down from $11.9 billion in 2008, the overall PF market volume stood at $147.4 billion. That was a drop of 44 per cent from 2008, but to put it in context, the overall global PF market stood at $114.5 billion in 2004 and at $166 billion in 2005.

SBI arranged 36 deals amounting to $20 billion of debt – 35.2 per cent of the total volume for the Asia-Pacific region. This included some major deals such as financing for the Sasan ultra mega power project, projects of Adani Power and Sterlite Energy, and funds for Vodafone and Unitech in the telecom sector.

The power sector continued to dominate lending and generated a record volume. More than $22.3-billion loans in 53 transactions in the sector were signed globally during the year, accounting for almost 40 per cent of the entire PF market. Also, a major contribution came from social infrastructure development schemes launched by the government recently.

In all, 224 financial institutions were ranked. Only lead arranger mandates are credited for the league table, while participation in syndications is not credited. Also, PFI tables do not include property or real estate sector transactions. In addition, the PF tables do not include corporate loans and those guaranteed by sponsors or governments.