Germany's KfW lines up $3.72 bn for India

KfW Bankengruppe, one of Germany's largest banks with a balance sheet of euro341 billion, will increase its commercial lending portfolio in India to euro3 ($3.72 bn) billion by 2009, open a liaison office of Kfw IPEX-Bank at Mumbai later this year and fund Indian companies planning to acquire firms in the European Union.

Peter Klaus, member of the Board of MDs of KfW Bankengruppe, said the institution had invested a total of euro30 million in two Indian infrastructure funds promoted by IDFC and IL&FS.

"We have already invested euro25 million in the IDFC fund earlier this year and will close in a day or two another euro5 million investment in an IL&FS fund. Both funds are still open and as we go along we can look at increasing our exposure," he told reporters at a roundtable organised by the India Brand Equity Foundation in Hannover.

KfW has an existing office in New Delhi and has been operating in India for the last 50 years. Since 1998, KfW has provided ¤4 billion to Indian state and private sector projects.

The Mumbai office, Klaus added, was the 'first step' in the process of expanding its operations in the country.

While most of KfW's involvement has been in development and government linked funding, the firm is now looking at participating in infrastructure projects in a big way.

"India presents a substantial investment opportunity and we will leverage it aggressively," he said.

Accordingly, KfW is looking at investments in the Mumbai and Delhi airport projects. "We are looking at the projects, independently of Fraport (which has won the deal for the Delhi airport along with India's GMR)," he said.

In response to a question on the India's current investment rating, Klaus said that within the KfW internal framework, it was better than that of Brazil and Russia.

Klaus added that his institution would be interested in Indian sovereign debt paper, if it is issued. There is expectation that after India's rating is upgraded, the government may issue sovereign bonds to raise funds in the international market.