Roads sector to get a leg-up as infra debt funds gain traction

Even as the economic slowdown continues to impact otherwise resilient operational road projects, infrastructure debt funds are gathering momentum given the potential of investment in the sector, experts say.
"There is a huge potential for investment in the infrastructure projects and we have seen interests from both global as well as domestic investors. Though there is a slowdown currently, the market will pick up in the coming months," IL&FS Financial Services managing director and chief executive officer Ramesh Bawa told PTI.
IL&FS has so far raised Rs 1,500 crore infrastructure debt fund and plans to increase the total corpus to USD 5 billion in the next two years.

Along with IL&FS, ICICI Bank, IDFC, India Infrastructure Finance Company (IIFCL) and IDBI have also floated infrastructure debt funds.
"Many firms have already entered into the market for providing funds to infrastructure projects, primarily the road projects as we are seeing huge investor interest not only from the domestic but also from global players like overseas pension funds as well as provident funds," India Ratings associate director (infra and project finance) Chintan Lakhani said.
As per the RBI mandate, infrastructure debt funds can invest in roads projects only after one year of commencement of operations.
"The delay in execution of projects or the economic slowdown is unlikely to impact the investor sentiment as they invest one year after the commencement of commercial operations of the road project," ICRA Assistant Vice President Shubham Jain said.

He said there are nearly 150 national highway projects operational where these funds can be invested and which are long-term in nature.