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IDFC the largest financier of renewable energy in India

Earlier this year, ACCIONA Energy closed long-term financing of the 56.1-MW Tuppadahalli wind farm that it is building in Karnataka state (south-west India) with Infrastructure Development Finance Company Limited (IDFC), a leading Indian infrastructure finance company. The agreement has been completed in three months, a record for this type of operation.

Last month, Caparo Energy had raised $78.5 million of Mezzanine finance for wind farms in India from IDFC.

The managing director of Infrastructure Finance Development Corporation (IDFC) is in the midst of a massive exercise started last year, which could be his biggest challenge in the six years he has spent at the company.

About a year ago, IDFC decided to almost treble its loan book to Rs 1 lakh crore in two to three years. The company looks to be well on course to achieving this target. The loan book rose to Rs 47,554 crore in the last financial year from Rs 32,562 crore a year ago, a growth of 42 per cent.

IDFC had shifted to various other businesses in the last five years. However, the management figured fee income could not grow beyond a point if expansion of the core book was limited.

Rajiv Lall, Managing Director, IDFC says while everything is still on course, the hazy macro outlook has made things difficult lately. Environmental concerns, the lacklustre performance of the government in infrastructure development and rising interest rates have already slowed the growth of the infrastructure sector. The global investor community is clearly not satisfied with the kind of barriers that infrastructure developers are facing. “Foreign investors always believe in herds and right now, the herd is running the other way. The perception is we are not a business-friendly country for infrastructure,” says Lall. The feeling, he says, is wherever the Union government’s intervention is required, progress is hampered.

Today, IDFC is the largest financer of private infrastructure in the country and the seventh or eighth-largest project financier in the world. Since its inception, it has financed 23,000 MW of power generation capacity. It is also the largest financier of renewable energy in the country. “We have a balance sheet and equity exposure that is larger than Ireda’s (Indian Renewable Energy Development Agency) in renewable energy,” he says. “We are almost half of the Power Finance Corporation’s balance sheet size,” Lall says, adding IDFC’s balance sheet, at $10 billion, is one-seventh of the total bank lending to infrastructure.

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