IL&FS, 5 government insurers agree to pool infrastructure debt funds
18 Feb 2014
IL&FS Infrastructure Debt Fund (IIDF) has signed a memorandum of understanding with five public sector general insurance companies, including General Insurance Corporation of India (the Government re-insurer), National Insurance Company Ltd, Oriental Insurance Co Ltd, New India Assurance Co Ltd and United India Insurance Co Ltd, to jointly facilitate infrastructure debt financing.
LIC has already invested Rs125 crore in the first scheme of IL&FS IDF, which was closed in December 2013.
LIC has also agreed to take a 2 per cent equity stake in the asset management company that will manage the funds collected by IL&FS IDF besides nominating one of its senior official in the board of IIAML.
Other insurance companies have agreed to invest up to 20 per cent each in the corpus of each scheme in IL&FS IDF.
The IL&FS IDF will initiate close ended schemes with maturities of between 5 and 15 years.
Investment will be in local currency and these units will be listed in the stock exchange.
Since Pension Fund Regulatory and Development Authority (PFRDA) and the Insurance Regulatory and Development Authority (IRDA) have both allowed entities regulated by them to invest in IDFs subject to certain conditions, the Employees Provident Fund Organisation (EPFO) is also likely to invest in infrastructure debt funds in the near future, Arvind Mayaram, secretary, department of economic affairs, said on the sidelines of the signing ceremony.
Mayaram said the signing of MoU with the insurance companies would send strong signal to the foreign sovereign funds /pension funds to also start investing in Indian infrastructure.