IFC mulls $100m commitment to $5bn India fund(3)

The private sector arm of the World Bank may join Blackstone and Citi in contributing to a $5 billion Indian infrastructure fund.

The International Finance Corporation may invest $100 million (€73 million) in an infrastructure fund being raised by the Infrastructure Development Finance Company in India. The private sector arm of the World Bank is currently in the process of reviewing the investment, said chief investment officer Anita George.

Citi and The Blackstone Group have already committed $250 million to the fund, which will target $2 billion in equity and $3 billion in debt. The fund will invest in roads, power sources and airports in India.

“This initiative is an important milestone in our search for innovative solutions to meet the vast challenge of financing the development of India’s burgeoning infrastructure sector,” India’s finance minister Palaniappan Chidambaram said when the two US firms finalised their commitment.

The IDFC will commit $100 million to the fund. MK Sinha, chief executive and president of IDFC Project Equity Company told The Financial Express in India that the fund will likely close in September with 10 to 15 investors. He added that the fund will eventually float on a public exchange in order to raise additional capital.

Earlier this summer, the IFC launched a $3 million environmental and social fund with emerging market buyout firm Aureos Capital. The fund is intended to make loans to companies with projects like reducing carbon emissions, improving energy and water efficiency and HIV/AIDS programmes. IFC also joined with Baring Private Equity Asia to invest $47.2 million in China’s Dongyue Group, a producer of environmentally friendly refrigerants, in order to increase the company’s production capacity and develop its silicon business.