IL&FS, Chescor plan infrastructure offset fund
Announcement / Corporate February 13, 2008
Chennai, February 13, 2008: At the Regional Offset Conference held at New Delhi today, Infrastructure Leasing & Financial Services (IL&FS) and Chescor Capital, signed a MoU to establish India’s first Offset Fund dedicated to fund transformational projects as approved by the Government of India. Subject to Government and statutory approvals, the Fund is slated to have an initial subscription of US$ 250 mn and a target corpus of US$ 5 Bn. The MoU was signed by Mr Ravi Parthasarathy, Chairman, IL&FS and Dr Amin Badr-El-Din, Chairman, Chescor Capital Corporation. IL&FS and Chescor aspire to have this Fund approved by the Government of India as one of the eligible mechanism for vendor to discharge their Indirect Offset obligation.
Over the next few years, India will be procuring a large volume of equipment, across sectors, from international vendors.
The Offset Fund seeks to align the interest of such vendors more closely with the priorities of development as articulated by Government of India from time to time. The Offset Fund will work on the principle that contributions to the Fund would gain credit in the sale of their equipment. By deploying the corpus of the Fund in projects of national priority, the benefits to the country would be increased manifold. At the same time, as the Fund would invest in commercially viable and sustainable infrastructure projects, contributors can look forward to a market based return on investment. This structure would, therefore, serve to simplify and make more transparent and accountable the discharge of their offset obligations of international vendors.
The Offset Fund is interalia, an additional instrument to address the burgeoning financing needs of India’s infrastructure sector which is estimated according to the Planning Commission to require aggregate investments of US$ 450 bn during the current Plan period. It is perceived that a Fund structure would provide opportunities to leverage and multiply 5 to 6 times the initial subscription in the Fund; as a consequence the Offset liabilities would transform into positive returns both for the economy and the contributors IL&FS is the leading infrastructure financing and development institution in India with a formidable track record of delivery and execution of critical infrastructure mandates. Chescor Capital is a leading Middle East and UK based financial services firm that has worked extensively on Offset Projects set up Offset Funds in the Middle East. Dr Amin Badr –El- Din, Chairman Chescor Capital is one of the world’s leading expert on Offset strategy and has worked with a number of countries in implementing their Offset program.
The MoU was signed on the occasion of the India Regional Offset Conference organized by CII in New Delhi on February 13, 2008.
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