PFC to enter financial advisory services in next five years

Kolkata: As part of its long-term plan to emerge as an equity investor in power projects, Power Finance Corporation (PFC) is hopeful of making an entry into financial advisory services sector in the next six weeks.

To begin with, the company will hold a minority stake of around 30 per cent in the special purpose vehicle (SPV), and the residual stake may be held by a consortium of corporates from the power sector. The SPV will facilitate private equity (PE) investment in the Indian power sector.

“We are expecting the advisory arm to be incorporated in this fiscal,” the PFC Chairman and Managing Director, Mr V.K. Garg, told newspersons here on Thursday.

Though PFC will be the single largest investor in the SPV from day one, Mr Garg said that the corporation would initially be a “minority partner” in the venture to avoid the PSU tag. The company, currently engaged in specialised debt-financing in power sector, is looking forward to emerge as an equity investor in the long term.

“We are trying to rope in the captains of Indian power sector including representations from both thermal and hydel in the venture. Our next aim is to emerge as a majority partner in the advisory services company,” he explained.

Explaining the role of the advisory services company, Mr Garg said that the initiative would facilitate entry of global PEs in the Indian power sector. “There could be some mismatch in expectations of global investors and the Indian power sectors. As an advisory service provider, our role will be limited to bridging the gap and help in the matchmaking,” he said.

Raise $4 billion

Mr Garg maintained that the country’s power sector was growing fast and there was an increasing appetite for funds. We are expecting our disbursals to grow by 15 per cent this fiscal and the sanction target for the next fiscal may go up from $4.5 billion to $ 6.5 billion.

“Considering the expected growth in sanctions, we may raise debt-finance to the tune of $4 billion in 2008-09,” he said. The finances are likely to be raised from the domestic market as the recent ECB norms do not confirm use of foreign currency loan in projects at home.