KIIFB sets eyes on Sovereign funds for dollars

Roadshows for Masala bond issue to begin in September


THIRUVANANTHAPURAM: The Kerala Infrastructure Investment Fund Board (KIIFB), the infrastructure investment arm of Kerala Government, is working on plans to establish a healthy line-up of fund flow in order to keep its coffers always ‘full’.

KIIFB has been establshed with a view to funding the state’s infrastructure projects without disturbing the budgetary equations prescribed by the Fiscal Responsibility and Budget Management (FRBM) Act.

Talking to, Dr KM Abraham (seen in the picture), the KIIFB chief said the Board was now seriously exploring the possibility of raising dollar funds through the External Commercial Borrowing (ECB) route. The investment Board will also look at the possibility of raising rupee funds through the ECB route. through private placement.

“We are in informal talks with sovereign funds from different Middle East countries to raise dollar funds by way of private placement with them. We are also getting enquiries from pension funds from Europe expressing keenness to invest with us,” Dr Abraham said.

He also told that KIIFB was readying for roadshows in key international financial markets such as London, Singapore, Middle East and Hong Kong in September as part of its ongoing drive to raise Rs5500 crore through ‘masala bonds’ programme (overseas bonds denominated in rupee).

“Fitch and S&P have already been entrusted with the task of rating the bonds and we hope that the rating from these agencies should be ready by the third week of August,” he said. To a query what level of rating he expected for this bond issue, Dr Abraham said that the Board was hopeful of getting an investment grade rating from these international rating agencies by August 3rd week.

“Anyway, it may not make sense to aspire to get a better rating than that of the country,” he quipped. The masala bonds issue being lead-managed by Standard Chartered Bank and Axis bank, once closed will be listed on London and Singapore stock markets.

However, it is not sure whether the whole Rs5500 crore will be raised in one go or in phases. The Masala bond issue is a medium term note (MTN) programme established by KIIFB and hence how much will the Board immediately raise  will depend on many other factors, the main being the requirement and pricing.

With the dollar staying high in terms of the exchange rate with rupee, this could prove to be an appropriate time to raise dollar funds through the ECB route, said one banker in charge of forex based in Kochi.

KIIFB has a fund base of Rs4089.19 crore as of March 31, 2018 by way of capital (Rs75 lakh), loan funds (Rs100.80 crore) and Rs3987.64 crore (as grants from Government of Kerala). The KIIFB chief strongly believes that a strong fund base to ‘flaunt’ could help the Board gain confidence from contractors participating with the KIIFB projects.

“Interestingly, this sentimental aspect will help us in facilitating competitive bids for our projects and hence makes commercial sense too,” Dr Abraham said in a lighter vein.

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