LIC, IL&FS sign pact for $2 billion infra debt fund

May 12, 2012 |

Reuters

mumbai

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Life Insurance Corp (LIC) and Infrastructure Leasing and Financial Services (IL&FS) on Friday signed a pact to set up a debt fund with a corpus of $2 billion to finance infrastructure projects in Asia's third-largest economy.

IL&FS Financial Services Ltd, the investment banking arm of IL&FS, plans to initially raise $1 billion from international as well as domestic investors for the fund, the company said in a statement.

State-run LIC will contribute up to 10 percent of the total corpus and the rest would be raised by IL&FS Financial Services in a phased manner, said an IL&FS official, declining to be named as he was not authorised to speak to the media.

Finance Minister Pranab Mukherjee announced in February 2011 the setting up of infrastructure debt funds to source long-term debt from both foreign and domestic investors in his budget speech for the last fiscal year.

India has pledged to spend $1 trillion on upgrading its creaking power plants, railways and ports in the five years to 2017 to deal with a key bottleneck to continued growth. Private cash has been pencilled in for half of that.

India Infrastructure Finance Company IIFCL.UL said in December it planned to launch a $1 billion infrastructure debt fund.

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