Kerala launches alternate investment funds to channelise private equity into public, private sector projects in the state

Kerala Infrastructure Fund Management Ltd (KIFML), an asset management company initiated by the State government with equity participation from public and private players like Kerala Financial Corporation (KFC), HDFC Bank, etc., has launched two innovative funds to channelize private equity towards commercially viable public and private sector projects in Kerala.

KIFML will initially raise Rs 600 crore in Kerala Infrastructure Fund, and Rs 250 crore in Kerala Innovation Fund from institutional investors and non-resident Indians (NRIs). State government entities have already committed the initial sponsor investments in the funds.  

Kerala Infrastructure Fund will invest in small projects that plug the crucial gaps in the State’s infrastructure. The initial focus is on projects in the healthcare sector. Kerala Innovation Fund focuses on startups.

Kerala Infrastructure Investment Fund Board (KIIFB) is the sponsor for Infrastructure Fund (putting in 30% of the corpus as government’s share). The 30% government share in the Innovation Fund is coming from KFC (15%) and 7.5% each from Kerala State Industrial Development Corporation (KSIDC) and Kerala State Financial Enterprises (KSFE).

“We have started the process of soliciting funds on one side, and enlisting the projects on the other. We have enlisted 52 projects, of which 40 are in the infra and 12 in the innovation (category)”, Ellangovan K, managing director, KIFML said.

Ellangovan said KIFML will announce the first investment soon. Only a Kerala centric company (registered in Kerala) or a company with substantial role or activity in Kerala will qualify for the funding. The funds are sector agnostic.

The enlisted companies for the Infrastructure Fund are mostly in the healthcare sector. “These are companies that are into medical devices, hospitals looking for expansions, establishing infertility clinics, dialysis centres, etc. This will be more like Series B funding (in companies with stable revenues and a solid user base that are focused on scaling operations and expanding market reach, not just proving the concept)”, Ellangovan said.

The first investment is likely to happen immediately and investment period for both the funds will be three years. “While KIFML has the mandate to invest upto Rs 125 crore in a single infra project, the plan is to invest between Rs 20-40 crores in a project. In the case of Innovation Fund the investment will be Rs 10-15 crores in a project”, Ellangovan said.

While the life of Infra Fund is 12 years and Innovation Fund, six years, KIFML may make strategic exists even before the life cycle of the fund ends.

Companies like Cochin International Airport Ltd (CIAL), Federal Bank, etc are also shareholders of KIFML.