Exim Bank of India may consider providing equity- and quasi-equity support for projects in Africa, said its Managing Director David Rasquinha.
“This is an idea that has come before us. We will explore it. I don’t see Exim Bank putting equity directly out of our balance sheet or as a standalone activity. But we may create a fund-of-funds and channelise funds along with other investors into select sectors in Africa,” Rasquinha told BusinessLine.
Exim Bank has, so far, been largely a debt provider with practically no exposure to equity funding of projects.
“If we provide equity- or quasi-equity support, we will be a core investor or an anchor investor. Given our name and experience in Africa, we should be able to catalyse other investors,” he said.
The idea that Exim Bank should consider equity support for African projects (with Indian industry involvement) came from African countries at the just-concluded 14 CII-Exim Bank Africa Conclave in the Capital.
Rasquinha said there is an increasing clamour from African countries that they need outside players like Exim Bank of India to consider providing equity- and quasi-equity support.
“This (providing equity support) is something new to us. We have certain RBI permission to look at this. But they date back to prior period, and so we have to examine it afresh,” he said.
Overseas pension funds
Exim Bank is also now open to the possibility of collaborating with overseas pension funds to offer financing for projects in Africa.
Rasquinha also said Exim Bank will look to offer forfaiting in export credit support. Under forfaiting, exporters can receive immediate cash by selling their medium- and long-term receivables at a discount through an intermediary.
Exim Bank will also look at innovative sources of financing, such as green bonds, development impact bonds, and diaspora bonds in the coming days.
Rasquinha said the bank was keen to up the game on its offshore investment play in the coming days.
Government business
Rasquinha sees the government side of business becoming a dominant share in the coming days. As ofDecember-end last year, both government and commercial portfolio had a 50:50 share in the business mix.
“Our current pipeline for government business is strong. My growth on government side will be steady. On the commercial side, we are trying to reorient itself and narrow the focus. We will also focus on overseas investment finance, which is export of capital by other name,” he said.
Government-mandated business includes lines of credit, concessional financing scheme, and buyers’ credit where Exim Bank works as an agent of the government.
Exim Bank prefers to expand its investment side in Africa, he said, adding that it would be a win-win for both, and investing in Africa would create jobs there.
Africa has probably become Exim Bank’s largest single exposure in terms of amount outstanding. “If we look at commitments, then Asia is larger. In terms of disbursed and outstanding, Africa is the largest,” said Rasquinha.
