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Arnab Basu
Head Business Development Infrastructure Project & Structured Finance Aditya Birla Finance Limited
September 7, 2012
Public
Private
Total
FY13
FY14
FY15
FY16
FY17
12th FYP
GDP
Infrastructure investment as % of GDP Infrastructure Investment
1.40
8.37
1.50
9.00
1.70
9.50
1.80
9.90
2.00
10.30
2.20
10.70
9.20
9.95
0.13
0.14
0.16
0.18
0.20
0.23
1.03
Infrastructure investment at ~10% of GDP critical to sustain high GDP growth Aditya Birla Financial Services Group
Copyright Aditya Birla Nuvo Limited 2009
Banks 21%
In addition, estimated funding gap in 12th FYP is ~Rs.12,00,000 Cr Represents a further opportunity for firms looking to fill the void NBFCs are better placed with banks close to hitting sector cap and needing further capitalization with Basel III implementation
Insurance Co's 4%
Infrastructure financing represents a huge opportunity for NBFCs Aditya Birla Financial Services Group
Copyright Aditya Birla Nuvo Limited 2009
Government Initiatives Specialized financial institutions such as REC, IIFCL, PFC, etc. have been formed to provide long term finance (and refinance) for infrastructure projects ECB and FDI norms have been liberalized to attract greater foreign investment in the infra sector A new category of NBFCs - Infrastructure Finance Companies (IFC) - has been created to provide specialized funding to the infrastructure sector Regulations for setting up Infrastructure Debt Funds (IDF) have been issued with the idea of sourcing a larger proportion of long tenor funds, primarily from pension and insurance funds Issuance of long term infrastructure bonds by IFCs to channelize household savings into infra projects
Private sector initiatives Large corporate houses like L&T, Tata, Aditya Birla, SREI, Piramal, and Premji Invest (Azim Premjis arm) have entered the NBFC space MNC banks like Goldman Sachs, Macquarie, and BNP Paribas have formed JVs with Indian players to enter the NBFC space Major private equity player KKR has formed an NBFC to provide debt funds Aditya Birla Financial Services Group
Copyright Aditya Birla Nuvo Limited 2009
Regulatory Push Regulatory changes like formation of IFCs and IDFs have allowed NBFCs to access foreign capital and channel it to infrastructure projects: Through ECB route, or Direct financing through Funds route
Sector Focus Specialized focus on infrastructure leads to deep understanding of risks and mitigation mechanisms Structuring Ability and Risk Appetite Structuring capability allows NBFCs to design tailor made solutions for infrastructure players Differential risk appetite allows products offerings across the entire infrastructure project life cycle
Efficiency and Flexibility Leaner organizations resulting in quicker turnaround time
Sponsor Funding
Medium term
Refinancing
Asset Finance
Short term
Bridge Loan
Financial Closure
Scheduled COD
Actual COD
Project Timeline
Sponsor Funding Buy-out of 2.5 year residual tenor NCDs issued by a south India based major player in the seed industry Receivables Securitization 1.5 year receivable assignment for an IT park (part of a major pan-India realty player) Cost overrun funding 2 year term loan to a major Infrastructure project developer for meeting cost overrun Refinance 14.5 year term loan to a green-field road project in a metropolitan city 5 year term loan for refinancing project lenders in the Metals & Mining sector
Aditya Birla Financial Services Group
Copyright Aditya Birla Nuvo Limited 2009
Project Finance
Mezzanine Finance
Sponsor Finance
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