Punjab National Bank on Monday joined hands with the Infrastructure Leasing and Financial Services for setting up a private equity fund for investing in domestic companies mainly in telecom, oil and gas, ports, water supply and surface transport segments.
The fund, with a commitment period of five and life of 10 years, would invest in equity and equity-related instruments of 15-20 Indian companies having successful track record of stable and consistent cash flows, a PNB release said in New Delhi.
The fund, jointly managed by PNB and IL&FS 's venture capital subsidiary IL&FS Investment Managers Limited, would have a secondary focus on sectors in which the Indian companies have a global competitive advantage, it said.
This comes at a time when Finance Minister Jaswant Singh had in the Union Budget announced major initiatives worth Rs 60,000 crore (Rs 600 billion) investment in the infrastructure sector.
One of the major initiatives include the construction of 10,000 km of roads under 48 projects besides the ongoing National Highway Development Programme.
The budget for this year also came up with the concept of 'viability gap funding', through which the government bridges the gap between the rate of return the bank gets on its lending and the actual return the (infrastructure) project yields.
The initiative from PNB and IL&FS also comes at a time when the Centre is mulling infrastructure equity fund with an initial capital of Rs 1,000 crore (Rs 10 billion).
PNB, with 4,450 offices across the country, has a turnover of Rs 1,16,000 crore (Rs 1,160 billion) and IL&FS manages assets worth over Rs 750 crore (Rs 7.50 billion).
