India Infrastructure Finance Company Ltd (IIFCL) - Web site of IIFCL www.iifcl.org

Background

IIFCL was set up by the Government of Indiain 2006 with the main objective of channelizing long-term finance to viable infrastructure projects through the Scheme for Financing Viable Infrastructure Projects through a Special Purpose Vehicle called India Infrastructure Finance Company Ltd (IIFCL), broadly referred to as SIFTI. The sectors eligible for financial assistance from IIFCL are as per the Harmonized list of infrastructure sub-sectors as approved by the Government and the RBI. These include transportation, energy, water, sanitation, communication, social and commercial infrastructure IIFCL has been registered as a NBFC-ND-IFC with RBI since September 2013. The authorized and paid up capital of the company as on 31st December 2014 stood at Rs 5,000 Crore and Rs 3,900 Crore,respectively. On a standalone basis, IIFCL has, till 31st December 2014, made cumulative gross sanctions of over Rs60,000Crore under direct lending and cumulative disbursements of over Rs37,000Crore, including under Refinance and Takeout Finance. Committed to its vision of taking India’s Infrastructure Sectorforward, IIFCL has been offering its financial support through the following schemes.

Direct Lending

Senior Debt: As part of a consortium, IIFCL provides long-term funds to commercially viable infrastructure projects, taking an exposure of up to 20% of Total Project Cost
Subordinate Debt: IIFCL provides subordinate debt up to 10% of the project cost (as part of its exposure of up to 20% of project cost). This type of debt is typically treated as Quasi-Equity by lenders.
Up to 31st December 2014, on a standalone basis, IIFCL has made cumulative gross sanctions of over Rs 60,000 Crore under Direct Lending, and made disbursements of over Rs 24,000 Crore.

Takeout Finance

The Takeout FinanceScheme of IIFCL is aimed at addressing the Asset Liability Mismatch and exposure constraints faced by banks by taking out loan from the books of the banks. This helps banks to free up their funds for investing in newer infrastructure projects. IIFCL can lend up to 30% of Total Project Cost (including Direct Lending). Disbursement in case of Takeout Financegenerally takes place one year after the actual Commercial Operation Date (COD). Under the Takeout Finance scheme, up to 31st December 2014, IIFCL has made net sanctions of over Rs 9,500cr (after cancellation) and has disbursed over Rs6,500 Crore.

Credit Enhancement Scheme

Under the Credit Enhancement Scheme, which is currently under pilot phase, IIFCL provides its partial credit guarantee to enhance the credit rating of bonds (for refinancing of existing loans) of infrastructure companies.IIFCL can undertake credit enhancement to the extent which enhances the credit rating of the project bonds issued by the Issuer (infrastructure developer) to minimum AA subject to a maximum of 50% of the total amount of Project Bonds issued. The rating enhancement enables channelization of long term funds from investors like insurance and pension funds in such bonds. Asian Development Bank (ADB) is providing backstop guarantee facility to IIFCL for up to 50% of IIFCL’s underlying risk pertaining to the Credit EnhancementScheme.

Refinance Scheme

IIFCL provides Refinance to Banks and other eligible Financial Institutions (FI’s) for their loans to infrastructure projects. Up to 31st December 2014, IIFCL has made cumulative disbursements of more than Rs6,200Crore as Refinance.

Subsidiaries

IIFC (UK): Set up in April 2008 and provides financial assistance in foreign currency to Indian companies implementing infrastructure projects in the country for the purpose of meeting the capital expenditure outside India.IIFC(UK) till December 2014 has made cumulative disbursements of USD 1,496 Mn. IIFCL ProjectsLtd (IPL): Set up in 2012 and provides advisory services including project appraisal and syndication services, as well as project development services involving constructingfeasibility studies, project structuring, financial structuring and development of detailed business case. IIFCL Asset Management Company Ltd. (IAMCL): IIFCL formed a 100% subsidiary asset management company viz. IAMCL to manage the IIFCL Mutual Fund (IDF). In Feb 2014, IIFCL Mutual Fund launched its maiden IDF scheme through private placement.On full subscription, the schemeachieved the distinction of being the first IDF Mutual Fund in the country to be listed on the Bombay Stock Exchange(BSE).

Sources of Funding

IIFCL raises funds through long term resources from both domestic as well as global markets Domestic IIFCL raises both equity and debt (both short-term and long-term) from the market through various suitable instruments created for the purpose. So far, the company has raised around Rs 32,600 Cr from the domestic market. International IIFCL has established strong business relationship with bilateral and multilateral institutions like ADB, World Bank and KfW and has committed lines of long-term low-cost credit to the extent of USD 1.9 Bn, USD 195 Mnand Euro 50 Mn, respectively. Further, IIFCL has executed a financial contract agreement of Euro 200 Mn with European Investment Bank. These relationships have helped IIFCL raise long-term resources, develop innovative financial products as well as adopt best practices especially those pertaining to Environmental and Social Safeguard Framework and Procurement Procedures.