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IL&FS raises up to $242M for infra debt fund from general insurance cos

19 February, 2014

IL&FS Infra Asset Management Ltd (IIAML) has raised up to Rs 1,500 crore ($242.05 million) as part of its planned $5 billion infrastructure debt fund, which it aims to raise over five years, as per a report in The Economic Times.

The firm has pooled in funding from at least five PSU insurance companies, including General Insurance Corporation of India, Oriental Insurance, United India Insurance, New India Assurance and National Insurance, which will together pick 2 per cent stake each, Ramesh Bawa, managing director and chief executive officer of IL&FS Financial Services, told the newspaper. 

This would provide confidence to overseas investors, especially foreign pension funds and insurance companies, which can participate in the fund.

Infrastructure debt funds are created to provide takeout finance for infrastructure projects. They provide an alternative source of funding against the traditional bank and can be used to buy bank loans given to infrastructure projects. They also tend to alleviate the stress on banking system as infrastructure projects have long gestation period.

IIAML is an asset management company promoted by IL&FS Financial Services to manage the IL&FS Infrastructure Debt Fund (IIDF). It is a joint venture between IL&FS Financial Services and Life Insurance Corporation of India, the country’s largest insurer. 

This is the first large infra debt fund to be created after the government announced its plans in 2011 to set up such funds. The fund was inaugurated by finance minister P Chidambaram on February 9, 2013 in Mumbai and IIAML launched the first set of schemes of IIDF in June 2013. Other institutions like IDFC, ICICI Bank and IIFCL had also announced plans to raise infra debt funds.

(Edited by Joby Puthuparampil Johnson)


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IL&FS raises up to $242M for infra debt fund from general insurance cos

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