India excels in project finance deals

Category: International Finance Sub-category: International Finance
Document type: news

According to a study India ranked on top in the global project finance market in 2009, ahead of Australia, Spain and the US.

The study, by Project Finance International (PFI), a source of global project finance intelligence and a Thomson Reuters publication, mentioned "the main market for project finance (PF) in 2009 was the domestic Indian market, which raised $30 billion (Rs 1.38 lakh crore), accounting for 21.5% of the global project finance market. This was up from $19 billion in 2008."

Also, for the first time, investment bank SBI Capital Markets, a subsidiary of State Bank of India, topped the global loan chart, ahead of top French, British and US banks. Three French banks followed: Calyon, BNP Paribas and Societe Generale.

“The global project finance market was propped up in 2009 by government-linked projects such as social infrastructure and renewables and by the fact that 20% of the market is in India, which surged to become the biggest and busiest market last year, toppling Australia from the previous year’ top position,” said PFI in its study.

In this case only the SBI Capital Markets are receiving huge attention in the loan market. 

Among other domestic loan arrangers, IDBI Bank has been ranked second,Infrastructure Development Finance Company (IDFC) has been ranked third and Axis Bank fourth in the Asia-Pacific region.

“At IDFC, our focus will be domestic markets only and given the size of opportunities in India, we would still further grow our operations here,” said Vikram Limaye, executive director at IDFC.

According to PFI data,"the PF loan figure stands at $139.2 billion in 2009 in comparison to the staggering $250 billion in 2008 and $220 billion in 2007."

Along with this after adding the figures for project bonds at $8.2 billion, down from $11.9 billion in 2008, the overall PF market volume stood at $147.4 billion. That was a drop of 44% from 2008, but to put it in context, the overall global PF market stood at $114.5 billion in 2004 and at $166 billion in 2005.

However, SBI arranges 36 deals amounting to $20 billion of debt – 35.2% of the total volume for the Asia-Pacific region, which includes some major deals such as financing for the Sasan ultra mega power project, projects of Adani Power and Sterlite Energy, and funds for Vodafone and Unitech in the telecom sector.

The power sector continued to dominate lending and generated a record volume. More than $22.3-billion loans in 53 transactions in the sector were signed globally during the year, accounting for almost 40% of the entire PF market.A major contribution came from social infrastructure development schemes launched by the government recently.

All total 224 financial institutions have been ranked. PFI tables do not include property or real estate sector transactions. In addition, the PF tables do not include corporate loans and those guaranteed by sponsors or governments.

Source: Business Standards