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Infrastructure Leasing & Financial Services (IL&FS) Group has chalked out plans to raise debt monies worth $2 billion from the overseas markets this fiscal, its Chief Executive Officer Ramesh C Bawa has said.
“My biggest agenda this year is to tap the overseas markets to raise $2 billion for refinancing. We are compelled to look abroad as the avenues for raising domestic resources to support infrastructure development is now limited.
Most of the domestic banks and institutions have reached their internal sectoral caps for infrastructure lending,” Bawa, who also heads IL&FS Financial Services Ltd (IFIN), told BusinessLine .
IL&FS is looking to tap certain Asian markets such as Singapore to raise money through ‘rupee denominated bonds’, a new funding avenue recently allowed by the Reserve Bank of India.
Bawa said IL&FS was awaiting final guidelines from the RBI before issuing rupee denominated bonds in Asian markets. Indian Railway Finance Corporation, another firm looking to issue rupee denominated bonds, is also waiting for RBI’s final guidelines.
IDF THRUST
Also on the anvil is ramping up of its infrastructure debt fund (IDF) so as to take the fund size to $1 billion in the next 12-15 months from the current level of about $300 million.
IL&FS was among the first few institutions that launched IDF in India through the mutual fund route. Besides IL&FS, the other institutions that have floated IDFs in India are ICICI Bank, IIFCL, and IDFC.
“Discussions are now at an advance stage with institutional investors in the US, Japan, and Australia for enhancing the size of our IDF. You will see some deal action in the next 2-3 months. We are also in talks with sovereign wealth funds,” Bawa said.
There is “no minus” in the concept of IDFs and it is a product that is clearly helping IL&FS, he noted.
“For banks, IDFs are not a focused business and therefore there is little interest from their side. Secondly, there is some reluctance on the part of banks to part with good assets. One of the objectives of IDFs buying assets is to create more lending space for banks is not being achieved”.
This has made the job difficult for IL&FS as it had to look “externally” to pick good assets outside the banking system for deployment of IDF monies.
REIT READY
Bawa also said IL&FS was ready to float a Real Estate Investment Trust (REIT) and was waiting for more clarity on the taxation side. “It is a good route. We are keen. But we are waiting for clarity on some tax issues as a result of which there have been no transactions yet in the market. We are ready with the transactions and will launch the day there is clarity. We are looking to be both the sponsor and investor.”
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