The government will likely divest up to 25% stake in India Infrastructure Finance Company (IIFCL), the state-run long-term lender for the infrastructure sector, sources told FE.
While the exact initial public offering (IPO) size will be decided by a ministerial panel, the current thinking is to make the issue size 25% of the equity to meet the minimum public shareholding norm in one shot, the sources said. It could consist of 10% fresh equity to raise capital for business expansion and a 15% stake dilution by the government, they added. After the LIC in 2022 and IREDA in 2023, this will be a major listing to be undertaken by the government in the state-run financial institutions.
Cabinet clears listing of IIFCL
The Union Cabinet gave its nod for the proposed listing of the IIFCL earlier this month, sources said, adding that the IPO may hit the market in FY27, after the preparatory work is completed.
The listing is aimed at improving corporate governance in the infra lender and facilitating fresh capital raising for growth without relying on the exchequer.
IIFCL is a wholly owned government of India enterprise established in 2006 to provide long-term financial assistance to viable infrastructure projects. It supports sectors such as transport, energy, water, sanitation, and urban infrastructure through direct lending, refinancing, and credit enhancement products.
IIFCL’s performance over FY20 to FY25 reflects a steady growth trajectory marked by rising business volumes, improved profitability and a sharp enhancement in asset quality. Annual sanctions more than quintupled from `9,337 crore in FY20 to `51,124 crore in FY25, while annual disbursements rose from Rs 6,015 crore to Rs 28,501 crore over the same period, highlighting the company’s growing role in long-term infrastructure financing.
The cumulative sanctions and disbursements stood at Rs 3.06 lakh crore and Rs 1.56 lakh crore as of March 31, 2025, with 5% of the sanctions and disbursements achieved in the last five years.
Profit surges as bad loans fall sharply
The lender’s profitability strengthened consistently, with net profit increasing steadily from Rs 51 crore in FY20 to Rs 2,165 crore in FY25, reflecting improved operating efficiency and healthier loan book performance. This turnaround was supported by a sharp reduction in asset stress. The gross non-performing assets (NPAs) ratio declined from 19.7% in FY20 to just 1.11% in FY25, while the net NPA ratio dropped from 9.75% to 0.35%, demonstrating recovery efforts and prudent underwriting.
IIFCL’s balance sheet also expanded significantly, with total assets rising from Rs 52,147 crore in FY20 to Rs 81,572 crore in FY25. Its net worth strengthened from Rs 10,306 crore to Rs 16,395 crore, providing a stronger capital base to support future growth.