Innovations in infrastructure project financing have emerged for the first time in India, with Bharti Mobile Limited - a group company of India's leading telecom conglomerate, Bharti Enterprises. As part of its effort to be more responsive to client needs and extend credit in local currency, the International Finance Corporation has offered a structural partial credit guarantee for a local currency bond issued by Bharti Mobile.

According to Akhil Gupta, Joint Managing Director, Bharti Enterprises,  "There are immense opportunities in infrastructure financing, as it is a new concept in the Indian market. We have increased the rate of public sector funding in infrastructure development. The bond issue, has been structured as three different offerings with tenors of five, eight and ten years. This was done with the motive of targeting investors at various levels. And that will only help to create huge liquidity for infrastructure projects."

It is for the first time in India that a mega debt issue in the infrastructure sector for which the Washington based International Finance Corporation is guaranteeing upto 76 percent of the principal amount. " We took up this business venture, as we realise the growing market demands in infrastructure funding. By investing in this sector, we hope to establish a benchmark in the domestic capital market," said Usha Rao Monari, Country Head - India, IFC.

To keep up with the pace of growth in other developed countries, India has to first develop its infrastructure, telecommunication specially. And Bharti - IFC's initiative for infrastructure project financing is a step towards it. " In this 1.4 million dollar project, a considerable amount would be spent for enhancing long distance telecommunication facilities. Credit enhancing mechanism would be one of our main motto, while working on this project. "

Due to this investment India's high savings rate might be used to fund much needed infrastructure projects. Bharti Mobile will provide cash collateral for an amount equivalent to the amount of the first two interest payments to be deposited in an account managed in trust on behalf of the debenture holders. Commenting on the expenditure that will be incurred during the project, Akhil said, " We as a group like to complete the work assigned within the given budget, and this time also we hope to perform, in a similar manner. As far as retaining over subscription is concerned , we are against it. By tightening the fiscal deficit, things should work out properly."

By: Sharmistha Chakraborthy