Finance Update

kiifb: Kerala body aims to raise more offshore money

MUMBAI: The Kerala Infrastructure Investment Finance Board (

KIIFB

), an investment arm of the state government, is looking to raise as much as Rs 5,000 crore through three

bond issues

in the next year and half to fund large and critical infrastructure projects.

KIIFB, which completed the closure of its first masala bond issue of Rs 2,150 crore last week, is exploring also selling $250 million (Rs 1,730 crore) of dollar-denominated paper and an equal amount of clean infra bonds, deputy managing director Sanjeev Kaushik told ET. The investment firm, the first of its kind in the country, is exploring a domestic issue of Rs 1,500-2,000 crore as well, he said.

“The appetite for our instrument was encouraging. There is a lot of demand from quality long-term institutional investors. From our side, KIIFB needs to create a large pool of capital to fund projects that will push the core infrastructure needs of the state,” Kaushik said.

Founded in 1999, KIIFB acts as a special purpose vehicle to mobilise funds for infrastructure development of Kerala. It has sanctioned projects worth Rs 44,000 crore which are under various stages of execution, Kaushik said.

KIIFB is a statutory body constituted under the Kerala Infrastructure Investment Fund Act, and has a Fund Trustee Advisory Committee headed by former comptroller and auditor general Vinod Rai. Former Reserve Bank of India deputy governor Usha Thorat and Bank of India’s non-executive chairman, G Padmanabhan, are the other two members of the committee, which ensures proper use of resources under the fund, Kaushik said.

KIIFB closed its first tranche of masala bonds on Friday, to become the first such state government-run arm to raise capital through a bond sale done outside India but denominated in Indian rupees. Such instruments reduce currency risk to the issuer.

“These bonds are government-guaranteed bonds, which will invest in clean infra projects,” Kaushik said.

Axis Bank and Standard Chartered were the lead managers to the issue, industry sources told ET.

Though Kaushik did not name the investors, sources said Caisse de dépôt et placement du Québec (CDPQ), which is Canada’s second largest pension money manager, along with two sovereign funds from the Middle East and Southeast Asia were among the investors.

Bond issues by Indian entities declined 30% in 2018 to $47.2 billion from $67.4 billion a year before, according to data compiled by Thomson Reuters.

Source

Prakash Poojary
Business Analyst

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