Power Finance Corporation Ltd, which lends to the Indian power sector, on Wednesday said that its board of directors has approved a proposal to launch a private equity fund of $1 billion in the next six months.
The board also approved to start a process to select a partner for this fund and would initially commence operations with $300 million, Mr Satnam Singh, Chairman and Managing Director, told a press conference after the board meeting held here.
After selecting the partner, PFCL will constitute a trust and an asset management company in the next six months. PFC will contribute to the trust about 5 per cent of funds.
Mr Singh said that following the board’s decision, PFCL would launch a tender to select an Indian partner for the proposed PE fund. The partner’s expertise in fund management and PFCL’s in lending to power sector are expected to create synergy for the PE fund.
Replying to questions, Mr Singh said that PFCL plans to engage a consultant to advise on whether the company should remain an NBFC entity or launch a bank.
Expecting to raise about Rs 12,000 crore, including Rs 6,900 crore from infrastructure bonds, and Rs 5,000 crore from tax free bonds, PFCL has so far been able to raise Rs 425 crore from tax free bonds and Rs 90 crore from infra bonds in the first tranche, Mr Singh said.
PFCL, as part of Medium Term Note programme, had recently proposed to raise $1 billion through external commercial borrowings which is likely to be completed by December 2012.