Financial Express recently hosted a webinar on Infrastructure Financing: Talk About Sustainability in collaboration with Refinitiv, a global provider of financial market data and infrastructure.

In a recent statement, Union Finance Minister Nirmala Sitharaman called for a rethinking of finance and development priorities for inclusive, sustainable and resilient infrastructure, prioritizing healthcare and education, ensuring the resilience of global supply chains and creating infrastructure in line with the #SDGs or the UN Sustainable Development Goals . .

Besides, in the wake of the COVID-19 crisis, “Building Back Better” for a sustainable and resilient recovery should be the core principle of infrastructure investments. Continuing investment patterns leave communities vulnerable to global environmental emergencies.

India’s infrastructure bottleneck has also been responsible for improving (or even maintaining) its global competitiveness, as measured by the World Economic Forum’s study on the 2015-2016 Global Competitiveness Report. India ranks 55th out of about 140 countries. Its relatively low quality infrastructure and transportation infrastructure contribute to this weaker position compared to its Asian counterparts.

Financial Express recently hosted a webinar on Infrastructure Financing: Talk About Sustainability in collaboration with Refinitiv, a global provider of financial market data and infrastructure. “We recently launched an app called Infrastructure 360, which takes into account the infrastructure advising space,” Shabham Jadeh, who specializes in fixed income trading and enterprise sales, reported in South Asia. The app provides data and insights for a project, enabling it to analyze trends in infrastructure investment, monitor progress across multiple projects and leverage transactions for due diligence, structuring, and evaluation, among other things.

Traditionally, infrastructure projects have been financed through debt. However, newer investment vehicles such as Special Purpose Acquisition Companies (SPACs) have allowed local companies to raise capital abroad recently. The real hot spot for SPACs was the Environmental, Social and Governance (ESG) space.

Meanwhile, the National Infrastructure Pipeline (NIP) has identified 7,000 projects that will require more than Rs 111,000 crore in investment in core sectors such as energy, roads, railways and urban projects over the next five years, which means the private sector has to get involved in big bucks. .

According to Mukesh Kumar, Senior Director and Head – Project and Corporate Finance at Amp Energy India, “In the infrastructure sector, we’ve already seen a lot of product delays; there were gaps in skill sets, in terms of how to stick to our global plan, there were issues from the markets. External also. Finance cannot be looked at in isolation. In the past year and a half, we have seen lenders as well as suppliers, manufacturers and stakeholders devising their own set of ways to address these challenges.” Abhishek Goyal, President and Senior Vice President: Mergers, Acquisitions and Project Finance at Amplus Solar noted, “There is always a positive aspect that infrastructure projects are looked at front and center.”

On the positive side, Arnab Basu, Executive Vice President and Director of Project and Structured Finance, Unions and DCM at Aditya Birla Finance Ltd commented, “If we go back to the early parts of the contract, there were a lot of challenges with in terms of delays in terms of connections, approvals and resources. Fortunately, over the years, developers, lenders, and the government together have solved a lot of these problems.So if you look at the projects we’ve funded in the last few years, there’s no delay; things have been simplified and there’s been a ton of offshore funds and trusts. Pensions and SWFs have entered and taken over these projects, because for them, the annuity proceeds that India provides are not available in any other part of the world.” He added, “Things have improved significantly from where we started. Jati Shakti and the National Infrastructure Plan will provide further impetus to the sector.”

To give an idea of ​​the size of the infrastructure gap, panelists stated that by 2040, infrastructure alone is expected to need more than $15 trillion, with a lot of new investors as well as long-term investors entering the space, whether it’s hedge funds or bonds. Sovereignty or insurance companies. Among the other things that have been collected over the past two years are green bonds or ERG loans.

Kumar noted, “When any investor ventures into a new market, what they are actually looking for is the commercial viability of their project, which includes the regulatory certainty in that geographic region, the financing environment in that country, the skill set needed and in today’s era, and sustainability as well.” He explained. : “There has been a lot of positive development in the financing environment, whether it’s domestic financial institutions or European Central Bank lenders, who are flush with liquidity and want to explore new deals and pricing structuring.”

Technology also plays a major role in making infrastructure financing transparent in terms of managing data and increasing accessibility. Abhishek Goyal, President and Senior Vice President: M&A and Project Finance at Amplus Solar stated, “These digital clusters are ultimately improving governance. I would like to see a day when infrastructure becomes an essential part of consumer asset allocation. There must be a day that goes It has five percent or ten percent of consumers and direct allocation of infrastructure bonds. In my opinion, the intersection of data and technology, and of course, accessibility is an interesting aspect of understanding infrastructure bonds.”

On narrowing the investment gap in existing infrastructure, Jadiyah said, “It’s relatively opaque; it’s relatively opaque.” We see the market expanding and a lot of private infrastructure assets being built. What we really need is a lot of smaller infrastructure data. From a public debt perspective, what we’re really trying to do for our investors, for the government is to bring all of these sustainable assets into one platform to understand how to fund them.”
Summing up this, Goyal stated, “In the past 10 years, I have seen a massive shift in the renewable space. In 2011, tariffs were Rs 15 and today we are talking about Rs 2 tariffs.”

Historically, infrastructure investment has resulted in a significant amount of losses through NPAs. This leads to the question of whether there is any kind of due diligence available to structuring deals to make them attractive to investors. Kumar commented, “Infrastructure is a capital intensive business and there are credible third parties that provide reports for technical aspects, financing and structuring in a quick way. You don’t have to wait six months for them to come up with this report.”

Ultimately, the pursuit of sustainability goals in infrastructure financing involves a global effort and India is well positioned to meet the challenge.

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