IFC Focuses on Infrastructure and Midsize Companies to Strengthen Competitiveness and Sustainability in India

IFC, a member of the World Bank Group, today reaffirmed its commitment to contribute to India’s economy by expanding its investments in private enterprises in the sectors where IFC is needed most. IFC Vice Presidents Farida Khambata and Declan Duff joined South Asia Director Paolo M. Martelli in India this week to discuss with government and private sector partners how to move ahead with IFC’s growing focus on India’s infrastructure, midsize companies, and financially underserved markets.

In the financial year ending June 30, 2007, private sector projects worth $3 billion were supported as a result of IFC’s assistance to the Indian corporate sector. IFC’s annual investments in India this year surpassed the $1 billion mark for the first time since IFC’s founding in 1956. IFC invested more in India in FY07 than in any other country, making the India investment portfolio its second largest after Russia.

This year IFC also doubled its portfolio in the infrastructure sector, to $600 million. Investments ranged from natural gas to wind power, and from port services to a fund for developing public-private projects in infrastructure sector.

Dhanendra Kumar, who represents India on IFC’s Board of Directors, welcomed the development, saying, “Today, a poised and confident India has set larger goals for inclusive growth and sustainable development. IFC is providing valuable advice and financing to help the private sector contribute to these goals. We are particularly pleased that a significant part of IFC’s commitments in the financial year have been to the infrastructure sector, in keeping with India’s priorities.”

“India’s impressive growth is improving the quality of life. The government seeks to ensure that growth is inclusive and sustainable. We want to help this important effort by boosting rural growth, building infrastructure, and supporting reform,” Declan Duff, IFC Vice President for Industries, explained.

Farida Khambata, IFC Vice President for Asia and Latin America, elaborated, “India’s priority is infrastructure, where the problem today is a shortage of bankable projects. IFC is setting up an infrastructure advisory facility with donor support to develop bankable public-private partnerships, in close collaboration with government agencies at the central and state levels. This will help create model PPP arrangements in newer subsectors and increase access to infrastructure services across the South Asia region.”

Paolo M. Martelli, IFC’s newly appointed South Asia Director, added, “IFC not only invests, but also manages advisory programs in challenging markets. We offer our global and local resources to the private sector in support of the larger goal of sustainable growth and poverty reduction.”

IFC’s strategic priorities include strengthening the focus on challenging markets; differentiating through sustainability; addressing constraints to private sector growth in infrastructure, health, and education; supporting local mid-tier manufacturing companies become globally competitive and helping local financial market development through institution-building and innovative financial products.

IFC’s products and services have expanded from the original dollar-denominated senior loans and equity, to include loans in a variety of currencies, including Indian rupees, quasi-equities of varying types, currency and interest rate swaps and, most recently, carbon credits. IFC’s advisory services are an increasingly integrated component of the Corporation’s contribution to private sector growth in developing regions.

Today IFC’s activities in India cover a wide range of sectors, from power, transportation, and oil and gas to manufacturing companies in auto components, engineering, pharma sectors to microfinance and housing finance institutions, poultry and vegetable farms, IT companies, and hospitals.

IFC’s focus is on supporting mid-tier banks and manufacturing companies that aspire to global competitiveness and lack easy access to long-term funding. In India, IFC was a founding investor in key financial institutions, such as HDFC and IDFC that remain partners today.

Since 1956, IFC has supported then early-stage Indian companies, such as Bharat Forge and Titan Watches, that have since grown into global brands; firms such as Bajaj Scooters, Arvind Mills, and Moser Baer, that have become household names; and industry leaders, including Tata Steel and Larsen and Toubro, that had sought to establish credibility in global markets.

Today too, IFC selects mid-sized high growth companies that are modernizing, restructuring, or expanding to become globally competitive. Recent investments include include MSPL, Lanco, ABC Coffee, Ocimum Bio, OCL, Kanoria, Suguna Poultry, Electrotherm, LG Balakrishnan, PSL, Drishti, Nevis, Montalvo, Indecomm, and iLabs.

IFC focuses on combining investments with capacity-building advisory services in such areas as governance structures, staff training, and systems and procedures for management, accounting, and risk assessment.