Govt-owned lender to raise ₹1,500 cr
CHENNAI: M Ramesh The government-owned lender, IREDA, plans to sponsor an ‘Alternative Investment Fund’ (AIF). The AIF would buy some of the loan assets in the books of IREDA, thereby providing IREDA with fresh funds for further lending.
The lender is engaged in providing loans to companies in the renewable energy sector. IREDA expects to promote (or, technically, “sponsor”) an AIF which would pool around ₹1,500 crore from various investors, more as a pilot project, a senior official of IREDA has said.
The market regulator, SEBI, describes an ‘alternative investment fund’ as a “privately pooled investment vehicle that collects funds from sophisticated investors, whether Indian or foreign, for investing it in accordance with a defined investment policy for the benefit of its investors.” IREDA’s AIF would be a ‘debt fund’, which means that it would primarily invest in debt or debt securities of listed or unlisted investee companies. The AIF would buy loan assets from other lenders, but cannot by itself give loans.
Making a presentation on the proposed AIF at RE-INVEST, a conference-cum-expo event organised by the government in Delhi earlier this month, IREDA’s Director (Technical), Chintan Shah, indicated a yield of around 9.2 per cent to those who lend money to the AIF.
An AIF would help IREDA unlock funds from fully-built projects and redeploy them for fresh projects. The AIF investor would get to finance fully de-risked, operational projects.
It is believed that yields of 8-10 per cent would be attractive to entities like pension funds.
IREDA intends to hold a stakeholders consultation meeting in Mumbai soon. The fund itself could be launched in January, Shah said.
As at the end of 2017-18, IREDA had on its books outstanding loans of ₹15,471 crore. It had disbursed ₹8,328 crore of loans during the year and made a profit of ₹393 crore. In line with the rise of renewable energy industry in India, IREDA’s loan disbursements have more than trebled in the last five years, from ₹2,471 crore in 2013-14.
In a separate chat with BusinessLine, IEDA Chairman and Managing Director KS Popli said that the lender has on its books non-performing loans of 6 per cent of the outstanding loans, gross, and 4 per cent after provisions.
He said the problem areas were loans given to biomass and co-generation projects.
Asked if loans to wind and solar projects had turned bad, Popli said, “none at the moment”.