IIFCL bets big on ‘takeout financing’ to drive growth this year

K.R.Srivats New Delhi | Updated on June 24, 2021

To be largely aided by Hybrid Annuity Model projects getting completed this year

India Infrastructure Finance Company Ltd (IIFCL), a government owned infrastructure lender, has decided to revise its strategy and place more emphasis on government sponsored projects and takeout financing this year, PR Jaishankar, Managing Director has said.

Aided by the Hybrid Annuity Model (HAM) projects – largely seen in roads sector, this State-owned infrastructure lender is looking to ramp up its takeout financing book to about ₹11,000 crore by end of this fiscal from the current level of ₹6,400 crore, Jaishankar told BusinessLine.

HAM projects

“We expect HAM projects to help us in a big way in achieving growth in takeout financing. 35-40 per cent of HAM projects are getting completed this year. We are already a leader in the HAM segment with 65 HAM projects financed by us. The projects that are already with me, I just have to take additional exposure of 10 per cent. In addition, I will compete for other projects too,” he said.

Under Takeout financing, loans made by banks to infrastructure firms are sold to IIFCL so that banks recover their much needed funds ahead of the payment schedule under the loan agreement. The Takeout Finance scheme offers infrastructure developers the benefit of lower interest rates than that under direct lending, freeing up their exposure limits with banks.

So far, IIFCL has been largely focused on institutional and refinancing solutions to drive growth. After recording strong financial performance in 2020-21, IIFCL is now looking to this fiscal expand its balance sheet in a big way and acquire more assets.

For the current fiscal, IIFCL is eyeing sanctions in excess of ₹20,892 crore, which was the sanctions level achieved in 2020-21 and the highest ever sanctions recorded by the company. IIFCL would aim to achieve disbursement level of over ₹12,000 crore, much higher than the disbursement level of ₹9,460 crore in 2020-21, according to Jaishankar.

Infrastructure investment trusts

Meanwhile, Jaishankar said that IIFCL is awaiting Reserve Bank of India (RBI) approval for it to invest in several Infrastructure Investment Trusts (InVITs) that have taken off in the country. “If RBI clarifies and allow us to invest in InVITs, then this will be another big revenue stream for us and add another ₹4,000 crore in the days to come. Like any other bank, we also want to offer financial assistance to InVITs. How we have to do it, whether we have to invest in the form of security or we have to lend directly at the SPV level, that is something we will look into. I am very hopeful that RBI will consider us favourably”, Jaishankar said.

Published on June 24, 2021

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