Pooled Municipal Debt Obligations Facility (PMDO)
Given the rapid pace of urbanization in India, the urban infrastructure sector which is one of the key drivers of the Indian economy, requires an enhanced focus. Traditionally, HUDCO and multilateral institutions such as the World Bank, the Asian Development Bank, Japan International Co-operation Agency, KfW etc., have been providing project finance assistance to government and local level authorities executing urban infrastructure projects. Such assistance is generally routed through the Government of India (GoI) and the respective state governments following the budgetary mechanism and generally sanction is based on guarantees provided by the respective state governmentsAttracting commercial debt to fund urban infrastructure has always been a challenge. Considering that GoI has announced various initiatives and programmes, to attract and promote sustainable investments in urban infrastructure projects, there is a significant opportunity for financing such urban infrastructure projects
The Pooled Municipal Debt Obligation (PMDO) facility has been structured through a partnership of 15 Banks/FIs including IL&FS with a corpus of Rs 2750 cr to primarily finance urban local bodies and Special Purpose Vehicles (SPVs) promoted under PPP arrangements, to implement urban infrastructure projects for Water Supply and Sewerage, Solid Waste Management, Roads and Urban Transport, Environmental Projects, Healthcare and Education etc
The underlying strategy of the PMDO is to improve credit worthiness and bankability of urban infrastructure projects, and use efficient transaction structures built on robust risk management processes, that have been successfully replicated in other Infrastructure sectors
The local bodies are encouraged to conceive and implement projects in the Public Private Partnerships (PPP) framework based on long-term concession agreements, to make service delivery more efficient and to utilise private sector funding by tapping the commercial debt and equity market. This arrangement is expected to relieve the urban local bodies of substantial investment burden on their books and to make scarce public resources available for core civic services
Structured Mezzanine Credit Facility (SMCF)
Funding for capacity creation in India has traditionally been through Development Financial Institutions and Banks. However, with the growing need for resources, Indian Corporates have begun to seek funding through structured financing from various sources. As a result, there is a significant opportunity for financing increasing capacity creation and other corporate activities through structured transactionsStructured Mezzanine Credit Facility (SMCF) has been structured through a partnership of 14 banks and financial institutions with a corpus of Rs 2650 crore. The Facility has been established primarily to provide mezzanine funding to Indian companies to enable them to scale up size of operations by exploiting opportunities during the current phase of growth in the Indian economy. These opportunities span across multiple sectors as well as local and international horizons
The Facility covers multiple situations such as project financing, capital restructuring, asset acquisitions, purchase of non-core assets, monetisation of assets, construction period finance, start up and ramp up financing, etc. The products under the Facility cover a wide gamut of debt instruments addressing the requirements of the Corporates across various sectors
SMCF has been able to uniquely position itself in the market by addressing the growing financial needs of the Indian Corporates