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PFC plans infrastructure lending
23 July 2010: PFC is planning to foray into infrastructure financing in a bid to broadbase its portfolio.
From being a power financing company, it wants to attain the status of an infrastructure financing company (IFC). The move, if approved by the Reserve Bank of India (RBI), will allow PFC to increase its lending exposure to the private sector projects in the power and infrastructure projects.
Depending on the approval by the RBI, PFC may look at acquiring an IFC. The current status of PFC, as a power finance company, limits its capacity to fund projects. The move will help company issue tax free bonds and also increase its exposure limit to individual borrowers by 5 per cent and to consortium borrowers by 10 per cent.
If the Union Government allows the company to convert into a NBFC-IFC firm, the company may also go for capital raising from the capital markets by either issuing fresh equity or by divesting the government stake.
In addition, PFC is looking to float a subsidiary to finance consortium lending projects. Consortium lending projects are those, where more than one financier is involved to finance a project.
Also, the company is planning to float a separate company to finance the renewable energy projects. The new entity, which will finance the renewable energy projects such as wind energy and solar energy, will be called Green Energy Ltd (GEL).
Source: Hindu Business Line