The Hindu Business Line : Srei Infrastructure signs $25-m loan deal with KfW

Srei Infrastructure Finance Ltd today signed a $25 million (Rs 115 crore) long-term loan agreement with KfW IPEX-Bank, the Frankfurt am Main headquartered DFI, counted among the 10 largest banks in Germany.

It specialises in financing of corporate and infrastructure investments in Germany, and abroad by both German and other European companies.

Mr Christian Murach, Managing Director of KfW, signed on behalf of the German bank and Mr Hemant Kanoria, Vice- Chairman and Managing Director, Srei Infrastructure Finance, for the Indian infrastructure financing outfit.

Describing the tie-up with Srei as an important cornerstone of KfW's proposed activities in India, Mr Murach said the bank, with a balance sheet size of 341 billion as on December 31, 2005, intends to substantially expand its India portfolio to $3 billion within the next three years.

He said KfW, with an overall loan portfolio of $90 billion in 2005, was looking for long-term partnerships, with particular focus on the SME sector.

Pointing out that the bank has been active in India during the last 40 years, Mr Murach said:

"As a bank specialising in the financing of complex transport and infrastructure investments, KfW IPEX-Bank is a natural partner in this field".

Mr Kanoria said: "We have been associated with DEG, the German Government institution since 1995, as they have been our partners, investing both in equity and debt of Srei."

He said Germany has been Srei's choice destination for creating a global subsidiary, through which "we have expanded in Europe and propose to foray into other countries".

Mezzanine funding

The bank has already invested in two infrastructure funds in India - $25 million in IL&FS fund and $5 million in IDFC fund. Asked on the bank's exposure to equity in Indian infrastructure projects, Mr Murach said KfW was mainly looking at mezzanine capital funding and not so much on equity participation, which in India was now to the extent of $130 million.

KfW IPEX-Bank, since 1998, has already funded to the tune of $5.5 billion on various private sector projects in India, half of which were by way of commercial loans. The bank, owned 80 per cent by the Federal government, and 20 per cent by the German Federal States, is a member of the KfW Bankengruppe, and as of January 1, 2008, will be separated into a subsidiary.

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