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India Infrastructure Finance Company Ltd (IIFCL) plans to invest about ₹2,000 crore in infrastructure project bonds before March end, said PR Jaishankar, Managing Director & CEO. This investment will only be made in AAA and AA rated infrastructure bonds and the main objective would be to promote the long term infrastructure debt markets in the country.
Besides Infrastructure project bonds, IIFCL will also look to invest ₹1,500 crore in InvITs for which there is already huge demand, Jaishankar said. “We have got allocation of ₹1,500 crore for InvITs. We will try to fulfil this mandate also by March end,” Jaishankar told BusinessLine.
₹325 cr in Virescent InvIT
Meanwhile, IIFCL has invested ₹325 crore in the non convertible debentures (NCDs) issued by KKR-backed InvIT Virescent Renewable Energy Trust (VRET). This investment marks the entry of IIFCL in the Infrastructure Debt Market by subscribing to Infrastructure NCD’s issued by an Infrastructure Investment Trust (InvIT).
IIFCL had made an e-bid for the issue on February 4. The total monies mopped out through the NCD offering was ₹650 crore, out of which IIFCL has invested ₹325 crore.
Virescent Infrastructure is a renewable energy platform backed by leading global investment firm (KKR) in India. Headquartered in Mumbai, Virescent is established to acquire operating assets and leverage investment opportunities in the renewable energy sector.
Jaishankar said that IIFCL will get a yield of 8.2 per cent for the VRET issued NCDs (rated AAA) which have a tenor of ten years.
Widens investment ambit
Keeping in mind the country’s infrastructure needs and development of bond markets, IIFCL has widened its objectives by investing into infrastructure project bonds.
This would not only lead to further improvement in IIFCL’s asset quality, but also boost the availability of longer-tenor debt finance for infrastructure projects, thereby creating an environment that promotes long-term financing for infrastructure sector, especially through bond markets, Jaishankar said.
“This issuance marks our first investment in infrastructure bonds in an Infrastructure Investment Trusts. In our endeavor to provide innovative financing solutions, IIFCL is looking forward to playing a crucial role to develop long term corporate bond market and further support Infrastructure Financing,” he said.
He said that there needs to be a new financial architecture wherein banks and financial institutions fund an infrastructure project up to construction phase and subsequent financing is routed through bond market and IIFCL is accelerating this proposition by actively stepping in to provide long-term finance through the bond structure.
“We trust that other long term investors like insurance players, pension and retiral funds are encouraged to participate in the long term bond structures,” he added.
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