IIFCL launches infrastructure debt fund

The government-run India Infrastructure Finance Company Limited (IIFCL) Tuesday launched its first infrastructure debt fund (IDF) with targeted initial corpus of $1 billion.

IIFCL has launched the debt fund through the mutual fund route.

After launching the new scheme here, Finance Minister P Chidambaram said the fund would help mobilise long-term financing for infrastructure projects.

"We should try to mobilise resources from insurance and pension sectors as these funds are available for long term horizon," the finance minister said.

Chidambaram said introduction of the new scheme by the IIFCL would "pave the way for setting-up of more such infra debt funds."

Besides IIFCL, other investors in the debt fund include Canara Bank, Oriental Bank of Commerce, Corporation Bank and HUDCO.

The new scheme will mainly undertake investment in debt securities or securitised debt instruments of infrastructure companies, infrastructure capital companies or infrastructure projects, special purpose vehicle (SPV), bank loans etc. with the investment objective of capital appreciation and trade on the stock exchange, according to a statement issued by the finance ministry.

IIFCL chairman S.K. Goel said the IDF will complement commercial banks in providing the required long-term funding to infrastructure sector and help in addressing their asset liability mismatch.

Goel said IIFCL is targeting an initial corpus of $1 billion by attracting both domestic and international investors.

The regulations for infrastructure debt fund, through mutual fund and non-banking finance company route, were issued by the financial regulators, Securities and Exchange Board of India (SEBI) and Reserve Bank of India (RBI), following the announcement made by the government of India in financial year 2011-12.