The landscape for infra financing has evolved with time and investors are now looking for safe haven projects to park their money.

Speaking to Bloomberg TV India, IL&FS Investment Managers Ltd’s (IIML) CEO and Executive Director Archana Hingorani said the legacy of stalled projects has hit investors’ risk taking ability.

How is the financing landscape looking right now? What is changing with the new fiscal year?

Things have not particularly changed from March to April. But I would say that, yes, the landscape in financing and investing in infrastructure is materially different from what it was a few years back. Post 2014 election, with the new government coming in, we have seen a fair bit of small steps which, probably on a cumulative basis, is going to make a long-term impact both in terms of viability of projects, starting of stalled projects and funding. But just from a financing perspective, I think given the fact that there were so many investments since 2005, which were stuck for many different reasons, the risk bearing profile of investors has changed considerably. People opt for shaving off a few basis points from the supposed 21 per cent for getting something, which is more measurable and meaningful within a certain timeframe. So we are seeing a greater demand for investments that look at operating assets rather than greenfield projects, which have a longer gestation, greater uncertainty, more execution risk and many other third party factors that are not necessarily managed by entrepreneurs at their levels.

Will you make a difference between operational or completed projects given the rise in stalled projects in recent years?

If you talk about it from an investor’s perspective, they would rather invest in commissioned projects because then they are only taking the risk profile on a particular traffic pattern. That is the business they are supposed to follow. They are not supposed to take the risk of what happens to the government, or a policy change or land not becoming available. They did not sign up for all of that. So obviously those projects which show a track record of one-two years of operation, cash flows and capacity to predict over the next 10-20 years of concession framework are of greater attraction to investors. For making sure that you get both aspects, some level of stability and definitely some higher level of return are needed for an investor to come all the way to an emerging market like India. One has to do a strategy that’s a mix of both.

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