India to see $500 mn IFC investment in 2006

International Finance Corporation plans to invest $500 million in 2006 in the Indian private sector and is currently talking to second tier banks about investments.

IFC's incremental investment in 2006 is almost half the institution's current outstanding India portfolio of $ 1.2 billion. In the current portfolio, about $1 billion was in the form of loans, said Anil Sinha, general manager, SEDF (a facility managed by IFC), today on the sidelines of a workshop organised by the Competition Commission of India.

Sinha said IFC was open to investing in the second tier banks with whom it was in talks through either equity or loans. IFC was willing to offer banks a choice between dollar denominated loans and rupee loans. It was also offering technical assistance to banks, added Sinha.

The institution had earlier invested in financial sector companies such as HDFC Bank, IL & FS and IDFC.

IFC's investment strategy in India will focus on manufacturing sector, infrastructure, and financial intermediaries. It is also looking at growing its advisory services in India.

Sinha said an area that interested IFC was designing solutions to improve investment climate in different states.

IFC also concentrates on providing assistance to small and medium enterprises in North East India. The South Asia Enterprise Development Facility (SEDF) is a multi-donor facility managed by IFC, which concentrates on the needs of small and medium enterprises in Bangladesh, Bhutan, Nepal and North East India.

India is IFC's third largest country of operations. Recently, IFC announced an investment of $ 15.2 million in two subsidiaries of India Hydropower Development Company through a debt financing deal. Last year, IFC invested in equity of Apollo Hospitals, a company listed on the stock exchanges.