Vijayawada: The Amaravati Financing round-table held on Friday has explored various classes of financing instruments covering debt, mezzanine solutions, equity and non-fund based support.
A key objective of the event was to highlight specific investment opportunities at Amaravati and seek interest as well as suggestions from the industry participants on best-fit financial instruments that could be beneficially deployed by APCRDA to source funds for the development of Amaravati at a low cost. Another key goal of the event was to showcase Amaravati and highlight its emergence to leading financial institutions so as to generate interest in the market about the new capital city.
The round-table was a marquee event for Amaravati and it was attended by senior leaders from financial institutions across the spectrum – banks, infrastructure funds, SWFs, private equities, non-banking financial companies, multi-lateral development agencies, etc. NIIF, Khazanah Nasional, Macquarie Infrastructure and Real assets, Morgan Stanley, IL&FS, the World Bank, Asian Development Bank, SBI, Axis Bank, Kotak Realty Fund, IIFCL, etc were some of the leading participants at the event.
The APCRDA delegation was led by C. Kutumba Rao, deputy chairman of AP Planning Commission, Dr Sreedhar Cherukuri, commissioner, APCRDA and V. Rama Manohara Rao, additional commissioner, APCRDA.
In order to spur rapid economic development in the city and ensure that APCRDA meets its commitments to the farmers and the people, a bulk of the infrastructure is expected to happen in the first phase.
Meet discusses specific funding for new capital
The APCRDA has already commenced the process of issuing bonds and has issued an RFP for a merchant banker to support it to raise around '2,000 crore through various bonds in Indian or global markets.
Collective Investment Scheme and Lease Rental Discounting were two innovative mechanisms discussed during the event. These instruments leverage APCRDA’s assets of land bank and stable yield-generating real estate developments respectively and would enable APCRDA to source up to Rs 4,500 crore capital from banks and financial institutions as well as retail investors in the short to medium term to finance its infrastructure spend.
Public-Private Partner-ships in physical infrastructure assets is a mechanism that could lead to private sector investment of up to Rs 5,000 crore in asset classes such as power, roads and water, generated a lot of interest with the workshop participants.
Finally, an Institutional Equity Fund that will have a long-term investment horizon and focus on cash-flow generating infra and social infra assets was also discussed. This fund is targeted at institutional investors including SWFs, real estate funds and pension funds and would provide long-term equity funding for the city’s infrastructure.
The participants shared their experiences and insights on the topic and also expressed their eagerness to be a part of the Amaravati story by collaborating with the state government and APCRDA. Suggestions like coming up with proper structures so as to derisk to cater to the market appetite could provide more comfort to various funds like sovereign funds. Exploring structures such as REITs and InvITs, and exploring alternate revenue sources that could be tapped by the APCRDA were proposed by the participants and discussed in the event.
APCRDA agreed to interact with the market participants on a one-on-one basis to seek their cooperation for specific funding needs. The Amaravati Financing round-table and the positive response it has garnered from the market will mark one more important step towards the construction of a world-class capital.c
