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International Finance Corporation (IFC), the private-sector lending and investment arm of World Bank, is considering investing $5-6 billion towards sustainability projects in India.
In an exclusive interaction with BusinessLine , Jun Zhang, IFC Country Manager for India, noted that in the previous financial year, which closed for IFC just a few weeks ago (July 1 - June 30), IFC financed $1.96 billion in about 40 projects in India, overachieving its yearly target of around $1.2 billion.
Focus on renewablesOut of this, Zhang said that around $450 million had been invested in the infrastructure sector, including renewable energy projects. The segment will continue to be a priority for IFC, and a special focus will be on waste water projects. Affordable housing, SME finance, financial inclusion and healthcare are other focus areas.
Some of IFC’s largest transactions in the infrastructure space in the recent past include $170-million investment in Ostro Energy, $125 million in Hero Future Energies and $15 million in Clean Max Enviro Energy Solutions, all of them being solar players.
Green bondsIn a separate transaction, IFC has created a joint venture with Tata Capital — Tata Cleantech. IFC commuted to provide up to $40 million to Tata Cleantech by subscribing to a senior debt instrument, structured as a green bond; although at the moment of transaction, the instrument was not yet officially recognised as a green bond.
More recently, IFC invested $103 million in L&T Infrastructure Finance’s green bonds, the first ‘official’ green bonds recognised by SEBI. According to Zhang, the green bond market has a huge potential for India, as, for example, compared with China. “India has a huge potential and we are very active in this segment. We at IFC want to do things differently from others. So rather than doing conventional financing, we want to do masala bonds, green bonds, green housing, infrastructure.”
When asked about the finance target for India for the next fiscal, he said the target has not yet been set.
“At IFC, we are an institution operating in the market, so the market conditions will dictate what we would do,” Zhang noted. “In our long-term planning, we envision 15-18 per cent growth in portfolio in 3-5 years on average.”
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