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GVFL to invest 60% of its Rs.10 billion infrastructure fund in clean energy ventures

According to reports, venture financing company, Gujarat Venture Finance Limited (GVFL) is set to increase its focus on clean energy projects for funding under its Rs 1000-crore infrastructure fund. GVFL is confident of raising about half of the total fund size by the end of December 2011.

GVFL had announced the Rs 1000-crore infrastructure fund – Golden Gujarat Growth Fund Series-1 during the Vibrant Gujarat Global Investors’ Summit 2011 held in January 2011. According to sources, a larger part of the fund will go to clean energy projects, besides financing projects for infrastructure development including industrial parks and textile parks. The company is interested to fund projects in solar and wind power generation space.

“Initially it is planned that 60 per cent of the funding would go to clean energy projects and infrastructure related to it, while about 40 per cent will go for infrastructure projects including industrial parks,” said a senior official at GVFL.

The fund has already received Rs 200 crore finance from Gujarat government earlier this year. The company is confident of closing the first phase of Rs 500 crore by December 2011. The fund would invest in the companies from high-end small and medium enterprises segment to mid corporate firms.

“Already Rs 400 crore worth of finances have been committed so far and another Rs 100 crore to come up soon. A formal announcement will be made for the first phase of closure by mid-December,” said H C Pattnaik, executive director, GVFL.

GVFL is in talks with domestic and international funding institutions like private equity companies, banks, insurance firms and pension funds to raise the remaining funds. “It takes about two years to close a large fund like this. Since the announcement of the fund was made in January this year, we will reach half-way by this year-end, while final closure will be made by December 2012,” said Pattnaik.

Meanwhile, the company has already started receiving proposals for projects and is likely to start taking up due diligence of the infrastructure projects soon. The seven-year fund, which is registered with markets regulator, Securities and Exchange Board of India (SEBI) is believed to yield average internal rate of return (IRR) of around 20 per cent for the investors.

State government holding in GVFL stands at 56 per cent through its public sector units, while HDFC, ICICI Group and several other entities are the minority stakeholders in the financing company.

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