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The United States International Development Finance Corporation (USIDFC) and India’s National Infrastructure Investment Fund (NIIF) are “working on the possibility of creating a fund” that would invest in renewable energy and green projects in India, USIDFC’s CEO, Scott Nathan, told businessline today.
The idea is broadly to create a fund with the USIDFC and NIIF bringing in $500 million each and getting more from other investors. “We are working hard on it,” Nathan said.
Nathan was here in connection with the inauguration of the 3.5 GW solar module plant of the US company, First Solar. USIDFC had, in December 2021, committed to provide $500 million to First Solar for building the project. Incidentally, USIDFC had also announced a similar commitment of $425 million to Tata Power’s upcoming solar module plant near Tirunelveli, Tamil Nadu.
NIIF is a “collaborative investment platform” for international and Indian investors, anchored by the Government of India, which manages funds with investments in different asset classes and diversified sectors that generate attractive risk-adjusted returns. NIIF manages over $44.9 billion of equity capital commitments across its four funds – Master Fund, Private Markets Fund, Strategic Opportunities Fund, and India-Japan Fund.
In an exclusive interview to businessline, answering a question on providing loan guarantees, Nathan said that “one of the reasons why we provide guarantees is to facilitate lending in local currency”.
He explained that some financial institutions may not need funding, but might need a guarantee to de-risk its loans – that is where USIDFC would chip in. (Incidentally, in October 2022, USIDFC had provided a $10 million (100 per cent) guarantee to Punjab Renewable Energy Systems Pvt Ltd (PRESPL), a biomass supply chain management company.
Pointing out that USIDFC did not require any US connection for lending, Nathan said the financier was fine with lending for Indian projects in third countries too. He gave the example of USIDF ‘s ($9.9 m) funding to EyeQ Vision for its expansion into Nigeria.
He said that USIDFC was fine with providing any kind of financial assistance--equity, debt, loan guarantee, political risk insurance, feasibility studies and technical assistance to companies. It does “expensive due diligence” to understand the nature of the project.
USIDFC has an exposure of $4 billion in India, which is 10 per cent of its global exposure.
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