Il & Fs Launches Rs 50cr India Development Fund

Core sector funding agency Infrastructure Leasing and Financial Services (IL&FS) yesterday launched a Rs 50-crore India Project Development Fund to fund initial project development efforts and feasibility studies and to later sell the projects to developers and assist in financial closure.

The fund would have a commitment period of three years and a life of five years. IL&FS aims to increase the fund size to Rs 100 crore. Hongkong Land, with a contribution of Rs 25 crore, is the major investor in the fund.

While the Life Insurance Corporation (LIC) and IL&FS are to contribute Rs 10 crore each, the Central bank of India, Bank of Baroda and Larsen and Toubro are to contribute Rs 5 crore each. IL&FS has also identified International Finance Corporation (IFC) and the State bank of India (SBI) as possible investors in the project.

 

According to Archana Hingorani, assistant vice-president, asset management business at IL&FS, projects already being developed by IL&FS will also be considered as possible investment avenues by the fund. "Our aim is to avoid cherry picking by which the best projects remain only with us. To avoid this, existing projects being evaluated by IL&FS will be put up before the fund."

The fund will be set up in India in the form of a trust and it will be deployed to develop a minimum of 10 projects and a maximum of 20 projects relating to power. telecom, surface transport and transportation systems and environmental infrastructure. For projects being jointly sponsored by government agencies, 50 per cent of the expenses for the project development effort may be met by the fund while the balance 50 per cent are to be met by the concerned government agency. The targeted return of the fund is between 20-25 per cent per annum. Meanwhile, IL&FS Venture, a subsidiary of IL&FS has tied up with a leading global fund manager, US based Invesco for launching a knowledge sector specific fund.

The corpus of the fund is slated to be between $100 to $150 million. "The bulk of the corpus will be brought in by Invesco. We have roped them in as we require a fund manager with investment experience in these areas," said Shahzaad Dalal , CEO, asset management business, IL&FS. The fund is slated to open next month.