Corporation Bank plans to float Infra Debt Fund

“There are players like IDBI, IIFCL, and IDFC among others, who have already evinced interest for such a fund. We will try to collaborate with one of our peers for setting up such a fund,” RN Pradeep, CMD of Corporation Bank said

New Delhi: State-owned Corporation Bank today said it is drawing up plans to float an Infrastructure Debt Fund (IDF) and will soon approach its board for approval, reports PTI.

“We had always asked for approval to set up such a fund. Now the final guidelines have come and we are definitely interested to float one. The matter will be placed before our board in the near future,” RN Pradeep, CMD of Corporation Bank, told PTI.

He also said that the bank would like to partner with other interested players for floating such an infra fund.

“There are players like IDBI, IIFCL, and IDFC among others, who have already evinced interest for such a fund. We will try to collaborate with one of our peers for setting up such a fund,” he added.

On 24th September, the Reserve Bank of India (RBI) allowed banks and non-banking financial companies (NBFC) to sponsor IDF, which can be set up as mutual funds and NBFCs.

This announcement came after finance minister Pranab Mukherjee’s speech in the 2011-12 Budget for setting up IDFs in order to accelerate and enhance the flow of long-term debt in infrastructure projects.

As per the central bank guidelines, IDFs that can be set up as NBFCs should have a minimum net-owned fund of Rs300 crore and a capital adequacy ratio of 15%.

Similarly, in case of mutual fund route, it has to follow the limit on investments in financial services companies and on capital market exposure.

On the possible corpus and time line for floating such fund, Mr Pradeep said that these things would be decided after the board approval.

The Mangalore-headquartered public sector lender has lent around 10% of its total advances of Rs79,000 crore by June 2011 to infra sector and has less leverage to increase it due to sectoral cap imposed by the central bank.

“A debt fund will allow us to lend more to infra sector,” Mr Pradeep said, adding that the bank’s total exposure to infra sector is spread across road, power and port sectors.

Corporation Bank reported a 5.29% increase in its net profit to Rs351.45 crore for the first quarter ended 30 June 2011, against Rs333.78 crore registered in the same period previous year.

Total income of the bank rose by 42.5% to Rs3,266 crore during this period from Rs2,293 crore in the corresponding period last fiscal.

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Core sector industries’ growth slows down to 3.5% in August

During April-August 2011-12, the growth of core industries slowed down to 5.3% from 6.1% in the same period last year

New Delhi: Eight infrastructure industries grew by 3.5% in August this year, down from 4.4% expansion witnessed in the same month last year, reports PTI.

The eight industries-crude oil, petroleum refinery products, natural gas, fertilisers, coal, electricity, cement and finished steel-have a weight of 37.90% in the overall Index of Industrial Production (IIP).

Electricity, steel and cement output grew by 8.9%, 7.7% and 7.2% in August, respectively, according to the provisional data released today.

In the same month last year, electricity production had grown by 1.6%, while steel and cement sectors had posted 10.8% and 1.6% expansion, respectively.

Crude oil production grew by 1.6% in the month under the review against 15.2% in the comparable period last year.

Petroleum refinery products output grew by 3.9% in August.

In the same month last year, the sector had witnessed a contraction of 2.3%.

Fertiliser output increased by 4.3% in August.

It was -5.7% in the same period last year.

Natural gas and coal output contracted by 5.3% and 15.3% in August, respectively.

During April-August 2011-12, the growth of core industries slowed down to 5.3% from 6.1% in the same period last year.

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Anil Ambani confirms plan to sell Reliance Infratel

"We are in the advanced stages of negotiations with a number of consortia which have expressed great interest in this very valuable asset... When we hopefully conclude the Reliance Infratel transaction, it will be the largest private equity transaction in the history of this country," RCom chairman Ambani told the shareholders at the AGM

Mumbai: Reliance Communications (RCom) chairman Anil Ambani today said the company is in talks with many consortia to sell its telecom tower unit Reliance Infratel in what could be biggest ever private equity deal in the country, reports PTI.

Addressing the shareholders at the RCom AGM, Mr Ambani also said the promoters plan to raise their stake in the flagship company to 75% from the current 67.9%.

"We are in the advanced stages of negotiations with a number of consortia which have expressed great interest in this very valuable asset, and I am sure that we will be able to move forward expeditiously. When we hopefully conclude the Reliance Infratel transaction, it will be the largest private equity transaction in the history of this country," Mr Ambani told the shareholders at the AGM here.

Despite posting a loss, the company has declared a modest dividend.

At present, it has an annual interest burden of over Rs679 crore on a debt of around Rs32,000 crore. The company also hopes to maintain its debt at substantially lower levels, Mr Ambani added.

The development comes amid reports that private equity giants Blackstone and Carlyle Group have jointly expressed an interest to bid for Reliance Communications' tower business.

At the AGM, the shareholders also approved issue of equity shares of RCom to qualified institutional buyers and raising of resources through issue of securities in the international markets.

Besides, the company also received the shareholders' nod for appointment of J Ramachandran as a director and adoption of full-year financial statements for 2010-11.

The shareholders also approved appointment of a manager of the company and that of the auditors.

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