JBIC eyes stake in Indian infrastructure projects

Japan Bank for International Cooperation (JBIC), the international wing of the Japan Finance Corporation (JFC), a policy-based financing institution, is planning to pick up stake in Indian infrastructure projects.

Besides providing export finance to Indian companies to source goods and services from Japan, JBIC is engaged in a phased programme for equity investments in infrastructure and environment projects.

There is a proposal for investment in an Indian power project, said Hiromichi Miyamato, representative (India, Nepal, Sri Lanka & Bhutan) on the sidelines of a seminar on emerging markets here On Thursday.

He, however, did not elaborate on the investment size and the name of the company behind the project. For any project to become eligible for investment from JBIC, a Japanese company must put in money (equity) into the project.

The Indian government has estimated that it would require $500 billion for infrastructure projects across various segments such as power, telecom, roads until 2012.

So far, JBIC has made equity investments in China Eco fund and a power project in Singapore, a company official said.

JBIC’s current exposure to India is in the form of loans and guarantees. The value of its outstanding loan portfolio was $1.1 billion, while it has extended guarantees of about $380 million, he said.

Meanwhile, senior officials from state-owned National Thermal Power Generation company, met Hiroshi Watanabe, president and chief executive of JBIC, for semi-commercial loan for capital expenditure under Leading Investment to Future Environment (LIFE).

The Japanese funding agency has set a target of lending $5 billion in two years under LIFE for projects involving clean power generation, energy efficiency improvement, water and urban transportation.

On the level of scope for investment flow from Japan, the JBIC official said interest has picked up from April. Investments had slowed down in the past six months as the global financial crisis intensified after Lehman Brothers’ collapse in September 2008.

JBIC is providing guarantees for Samurai Bonds, a yen-denominated bond issued by a non-Japanese firm or institution in order to encourage the use of Asian funds for regional needs, tap global markets and vitalise Samurai bond markets.