Power Finance Corporation’s (PFC) PE fund, which is targeted at last mile energy requirements of power projects in India, is expected to bring into its fold large cross-border funds such as Cornell Capital Partners, Babson Capital Management, Sun Life Financial, AllianceBernstein and Cigna.
Confirming that the fund is being set up, PFC chairman VK Garg told ET that the target was to scale it up to $1 billion eventually. “We are targetting $1 billion because of the huge fund requirements of the power sector in India. After all, each ultra mega power project will cost around $4 billion,” Mr Garg said.
He also confirmed that PFC has been in talks with several players overseas, and the final names of the partners for the fund are likely to be announced soon. “We are talking to several players to make the fund really big,” Mr Garg said. While PFC is likely to hold a minority stake in the fund, it will remain the largest investor, sources said.
To begin with, the fund will have a corpus of around $300-500 million, said a source. “We are finalising the financial model of the fund,” Mr Garg added. The interest in picking up a stake in the fund is very high among NRI groups and large investors in the US and UK, the source said.
“The exit route from the PE fund will be through sale of security in the market or to third parties. PFC will leverage the expertise of its technical staff to carry out due diligence of the power projects,” the source added.