IIFCL in Advanced Discussions with ADB and Korean Exim Bank to Secure USD 600 Million Financing

India Infrastructure Finance Company Ltd (IIFCL), a state-owned entity, is in talks with the Asian Development Bank and Korean Exim Bank to secure USD 600 million through blended finance. This move aims to broaden its investor base and reduce borrowing costs. According to Managing Director P.R. Jaishankar, the discussions are at an advanced stage, with a potential agreement expected by December.

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While IIFCL is prepared to borrow the entire USD 600 million at once, the availability of funds depends on the lending agencies. Jaishankar mentioned that around USD 200 million might be secured within this fiscal year, with the remainder anticipated in 2025-26. He stated, "As far as our appetite is concerned, we can go beyond USD 600 million. So, we can immediately raise all USD 600 million also, given lenders are able to provide us."

External Commercial Borrowings Strategy

In addition to blended finance, IIFCL plans to raise USD 200 million through external commercial borrowings (ECB) by January. The company is in contact with the Asian Development Bank, World Bank, and Japan International Cooperation Agency for this purpose. The strategy behind overseas borrowings is to ensure cost-effectiveness and access long-term funds.

Jaishankar explained that they are targeting funds with a tenor of 20-25 years from multilateral sources. To date, IIFCL has raised 50 billion yen from JICA, USD 1,900 million from ADB, and USD 195 million from the World Bank. The government has also approved IIFCL's plan to raise funds via overseas green bonds.

Focus on Sustainable Projects

Jaishankar highlighted that if favourable premiums and pricing are available for green bonds, IIFCL will pursue them due to its significant interest in sustainable projects. He stated, "Because we have enough sustainable projects, our appetite is very big for sustainable projects."

When questioned about IIFCL's involvement with the Adani group, Jaishankar confirmed that there is investment but assured it is fully ring-fenced. This indicates that any exposure is isolated and protected from other financial activities.

IIFCL's efforts to secure funding through various channels reflect its commitment to expanding its financial resources while maintaining cost efficiency. By engaging with international financial institutions and exploring green bonds, IIFCL aims to support sustainable infrastructure development in India.