News: India's Exim Bank to invest $10 m in Asian fund

(DNA 22/07/2006) Kolkata - The Export-Import Bank of India (Exim Bank) has decided to invest around $10 million into a $100-million pan-Asia development fund, which is being sponsored by IL&FS and Orix Corporation of Japan, to involve Indian companies in project-contracting capabilities, enabling them to participate in infrastructure projects across Asia.

Exim Bank is also aiming a target growth rate of 25% to raise funds worth around Rs 6,000 crore in Indian currency and $800 million of foreign funds this year.

It is likely to go in for innovative instruments like Samurai bonds and medium-term notes for raising the foreign currency capital.

To increase its support to Indian companies venturing abroad, the bank is also taking up equity exposures in companies on a selective basis, while also providing them lines of credit to do business.

"The objective is to support these companies in overseas markets and provide credibility and also have a local legal presence. But we are doing it on a selective basis.

"In most cases, the equity investments in companies is up to a maximum of five years, the time within which the companies back the shares," T C Venkat Subramanian, chairman and managing director, Exim Bank, said.

The equity exposure is generally restricted to $10 million in a single venture and 25% in a joint venture. Exim Bank has recently picked up a token stake in companies like Tata Coffee and Gujarat Heavy Chemicals Ltd.

Among some of the recent overseas acquisitions by Indian mid-size companies financed by Exim Bank include a Taiwanese company engaged in the manufacture of gelatin, soda ash facilities in Romania, a large home textiles company in the UK, an oil rig company in Norway and a major coffee brand in the US.

Subramanian was speaking to newspersons on the sidelines of a banking summit here on Friday.

"The proposed pan-Asia Project Development Fund will cover countries like Cambodia, Indonesia, Malaysia, Philippines, Sri Lanka, Thailand, Vietnam and India.

"And the projects developed under this fund will be first offered to Exim Bank for funded and non-funded financial support," the CMD said.

Exim Bank has also picked up stakes in some African banks. "Indian companies are a little apprehensive to go to West African markets. Hence, we are stepping in to provide credit facilities."

As part of its initiatives to help the Indian SME and rural enterprises get better prices in the overseas markets, Exim Bank is joining hands with SMEs and self-help groups (SHGs) for providing marketing support.