India Infrastructure Finance Company Ltd (IIFCL)
Funding Foundation of the Future
IIFCL is a wholly-owned Government of India company set up in 2006 to provide 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 RBI and as amended from time to time. These broadly 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 30th September 2015 stand at Rs 5,000 Crore and Rs 3,900 Crore, respectively.
On a standalone basis, IIFCL has made cumulative gross sanctions of over Rs 63,800 Crore under direct lending to more than 360 projects and has made cumulative disbursements of over Rs 45,000 Crore, including disbursements under Refinance and Takeout Finance, till 30th September 2015.
IIFCL has been offering its financial support to the infrastructure sector through the following products/services.
FOR GREENFIELD PROJECTS
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 (including Subordinate Debt, if any). In case of PPP projects that have the provision of compulsory buyback by the authority on termination, IIFCL may offer loan with tenor longer than other lenders and remain sole lender, if necessary, after other lenders are paid out.
Subordinate Debt:IIFCL provides subordinate debt up to 10% of the project cost (as part of its exposure of up to 20% of Total Project Cost). This type of debt is typically treated as Quasi-Equity by lenders.
Till 30th September 2015, on a standalone basis, IIFCL has made cumulative gross sanctions of over Rs 63,800 Crore to more than 360 projects, and has made cumulative disbursements of over Rs 27,600 Crore under Direct Lending.
FOR BROWNFIELD PROJECTS
The Takeout Finance Scheme 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 Finance generally takes place one year after the actual Commercial Operation Date (COD).
Under the Takeout Finance scheme, up to 30th September 2015, IIFCL has made cumulative net sanctions of over Rs 14,000 Crore in 58 projects and has disbursed over Rs 11,000 Crore.
Credit Enhancement Scheme
Under the Credit Enhancement Scheme, IIFCL provides its partial credit guarantee to enhance the credit rating of bonds issued by infrastructure companies to AA or higher for refinancing of existing loans. IIFCL can undertake credit enhancement to the extent of 20% of Total Project Cost (40% of Total Project Cost with backstop guarantor) subject to a maximum of 50% of the total amount of Project Bonds.
Credit 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.
In September 2015, first bond issue of Rs 451 Crore, with credit rating enhanced by partial credit guarantee provided by IIFCL under the scheme, was successfully placed. IIFCL is working on many more such transactions.
IIFCL provides refinance to banks and other eligible financial institutions (FI’s) for their loans to infrastructure projects.
Under the refinance scheme, till 30th September 2015, IIFCL has made cumulative disbursements of over Rs 6,200 Crore.
IIFC (UK): IIFC (UK), a wholly-owned subsidiary of IIFCL, was set up in April 2008 to provide financial assistance in foreign currency, for the import of capital equipment, to Indian companies implementing infrastructure projects in the country. Till 30th September 2015, IIFC (UK) has made cumulative disbursements of over USD 1.6 billion.
IIFCL Projects Ltd (IPL):IPL, a 100% subsidiary of IIFCL, was set up in 2012 to provide advisory services including project appraisal and syndication services, as well as project development services involving conducting feasibility studies, project structuring, financial structuring and development of detailed business cases.
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 scheme achieved the distinction of being the first IDF Mutual Fund in the country to be listed on the Bombay Stock Exchange (BSE).
IIFCL MF (IDF) is currently in the process of launching two new schemes, both rated “AAA MF-IDF” by two domestic credit rating agencies, with one focused on infrastructure sectors with a fund size of up to Rs 1,500 crore and the other focused on Green initiative (Solar and wind energy, waste-to-energy, water and sanitation etc.) with a fund size of upto Rs 1,000 crore.
Sources of Funding
IIFCL raises funds through long-term resources from both domestic as well as global markets
IIFCL raises debt (both short-term and long-term) from the market through various suitable instruments created for the purpose. Till 30th September 2015, the company has raised around Rs 32,600 Crore from the domestic market.
IIFCL has established strong relationships with bilateral and multilateral institutions like ADB, World Bank, KfW and European Investment Bank and has committed lines of long-term low-cost credit to the extent of USD 1.9 billion, USD 195 million, Euro 50 million and Euro 200 million, respectively. Further, IIFCL is in discussion with JICA for Line of Credit for JPY 5 billion.
These relationships have helped IIFCL to 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.
IIFCL’s various domestic long term borrowings (bonds) have been rated ‘AAA/ AAA(SO)’ by various rating agencies.