Failure to find suitable projects stalls First Leasing, IDFC SPV

Kavitha Venkatraman

Chennai, Oct 30: The special purpose vehicle (SPV) floated by the Chennai-based non-banking finance company, First Leasing Company of India Ltd (FLCI) along with the Infrastructure Development Finance Company Ltd (IDFC) for funding mega core sector projects is yet to take off as the promoters are unable to identify suitable projects. This assumes significance as a host of infrastructure projects are hanging fire as promoters of the ventures could not find financial backers.

The promoters of the SPV are also scouting for additional partners in the SPV. However, whether the existing promoters would dilute their equity stake in favour of the newcomers or would enhance the equity base to accommodate new partners is not clear. Top officials of the company told The Financial Express that the promoters of the SPV are now ‘going slow’ with the initiative as they are yet to spot infrastructure projects which satisfy the parameters set by the company.

“The SPV, which was set up a couple of months back to address financing requirements of big infrastructure projects worth over Rs 100 crore, is yet to take off as we have not yet identified suitable projects for funding,” said sources. In fact, sources say, the company has not yet received a single proposal from the promoters of any such project.

Sources said that FLCI and IDFC had joined hands to set up the SPV in view of the huge potential for funding infrastructure projects a couple of months back. Both FLCI and IDFC have chipped in about Rs 10 crore each towards the initial equity capital of the SPV. “We are also looking for new partners to pick up equity stake in the SPV. However, we have not yet identified any companies for offering equity in the SPV”, sources said.

The idea of the SPV was to fund major projects in sectors such as power, port, roads and highways, telecom etc. The company chosen for funding by the SPV would have to set up an ‘indenture trustee’ in which banks and other financial institutions could be members. These banks and FIs would together work through the ‘indenture trustee’ to contribute the debt portion of the project cost amounting to not less than Rs 80 crore.