The to unlocking Indian Infrastructure

Transcription

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2 Corporate Presentation The to unlocking Indian Infrastructure opportunity

3 1 Indian Infrastructure directionally right but yet to regain momentum Click to edit Master title style 2 IDFC riding a Megatrend within a Megatrend 3 IDFC Stakeholders 4 IDFC Financials 5 IDFC Unique Proposition 3

4 Indian Infra space is complex and demanding.. Extremely competitive Aggressive expectations of returns from infra assets Execution capabilities established Stretched balance sheets $ IDFC Public Sector not keeping pace with Private Sector Delivery (coal, offtake) Supportive Complex regulations Pace of reforms slow 4 Governance Transparency Shattered infrastructure valuations in public markets Valuation expectations of sponsors and private capital providers yet to converge Asset sales the only way out?

5 The Indian Infrastructure story is far from over.. Power Perennially Starved! Click to edit Master title style Capacity addition at ~7% every year But per capita consumption far below global average Per capita consumption (w atts) 13,647 2,456 1/3rd of China, 1/20th of USA USA China India Ports 67% capacity addition in major ports during 11th plan period.. but still capacity utilisation at 85%+ vs 70% norm 67% increase in major ports capacity (mn tons) Choked! Average time for clearing cargo is ~20 days (5x slower than Singapore) FY07 FY12E 5

6 Roads The Indian Infrastructure story is far from over.. ~5,000km of highways added over past 4 years. Click to edit Master title style But still, 2% of Indian roads carry 40% of traffic! ~5000km of highw ays added in past 4 years 71,772 Woefully short! Railways Lagging behind global standards In single year of 2011, China added 2x length of highways that India added in past 4 years Only ~3% increase in route length (km) over past decade Only ~5% increase in track length (km) over past decade Today, India s rail track length per sq km area is 1/3rd global average area km / 1,000km 66,754 Mar '08 Mar '12 India's rail track length per sqkm area is 1/3rd of global average 125 Global Average 35 India 6

7 Infra recovery seems round the corner 1 Government has communicated strong intent to revive reforms (National Investment Board) 2 Long pending appointments t of heads of major PSUs underway 3 Debt restructuring scheme for SEBs to revive their finances 4 Land acquisition bill to be introduced to Parliament post Cabinet approval 5 PMO intervening to resolve FSA deadlock between Coal India and power producers 7

8 1 Indian Infrastructure directionally right but yet to regain momentum Click to edit Master title style 2 IDFC riding a Megatrend within a Megatrend 3 IDFC Stakeholders 4 IDFC Financials 5 IDFC Unique Proposition 8

9 Megatrend within a Megatrend FY06 FY12 FY17E Infrastructure Spend to Rise to ~10% of GDP Public Sector Private Sector 6,000 The Megatrend 4,500 within a 3,000 megatrend Private Sector Participation 1,500 Private sector infra investments to outpace public sector 0 FY10 FY11 FY12E FY13E FY14E FY15E FY16E FY17E 9

10 IDFC poised to ride the Megatrend within a Megatrend $ IDFC Government Participation in policy making at multiple levels Centre, State and Regulators Liaison i with policy makers and inputs for drafting policies i Advisory to policy makers - orient decision makers to ground realities Training the execution arm(bureaucracy) in creating PPP capacities IDFC Private companies FULL SERVICES FRANCHISE FOR ALL PRODUCTS AND SERVICES FOR INFRASTRUCTURE ACROSS THE ENTIRE VALUE CHAIN Enable private sector participation in infrastructure opportunity by providing capital (debt and equity) to developers Help private infrastructure companies to raise capital Advice on participation in infrastructure opportunity in right segments and on scale to ensure optimum profitability Developed strong relationships with infrastructure developers across categories and market sizes IDFC Capital Markets Ability to syndicate both debt and equity for clients Participate as an investor (through its various funds) and lender (from the balance sheet) Trusted partner (several rounds of successful fund raising) 10

11 1 Indian Infrastructure directionally right but yet to regain momentum Click to edit Master title style 2 IDFC riding a Megatrend within a Megatrend 3 IDFC Stakeholders 4 IDFC Financials 5 IDFC Unique Proposition 11

12 IDFC has evolved and grown with Indian Infra 2011 IDFC raises ` 1,451 cr from 7.3 lakh retail investors in LT Infra Bonds IDFC and Natixis Global Asset Management enter into a Strategic Partnership. NGAM acquires a 25% minority stake in the IDFC AMC & the Trustee company 2010 Raises additional capital of ` 2,654 cr through a QIP & Preferential Allotment IDFC first NBFC to be classified as Infrastructure Finance Company (IFC) by RBI IDFC becomes part of Nifty Forays into investment banking by acquiring controlling stake in SSKI Enters into asset management by acquiring the AMC business of Standard Chartered Bank Successfully raises ` 3,837 cr for India Infrastructure Fund (IDFC Project Equity) Successfully raises ` 3,160 cr for our third infrastructure focused Private Equity Fund 2007 Raises additional capital of ` 2,100 cr through a QIP at ` 127 per share 2006 Successfully raises ` 1,988 cr for our second infrastructure focused Private Equity Fund 2005 Undertakes initial public offering of equity shares at ` 34 per share 2004 Successfully raises `844 cr for the India Development Fund, Our first infrastructure focused Private Equity Fund Incorporated in Chennai as a PPP model based on the recommendations of the 'Expert Group on Commercialisation of Infrastructure Projects' under the Chairmanship of Dr. Rakesh Mohan

13 Shareholding & Board of Directors Solid Pedigree Corporate Bodies, 5.41% Shareholding( Dec 31, 2012) MF, 3.18% An exemplar of a successful public private partnership GoI, 17.26% Deepak Parekh, Non-executive Chairman, HDFC Non-executive Chairman Retail, 8.10% FIs / Insurance Co / Banks, 12.10% Sunil Soni, Additional Secretary, Department of Financial Services, Ministry of Finance Joseph Dominic Silva, Representative ti of Khazanah S. H. Khan Nominees of Ministry of Finance, Government of India Nominee of Domestic and Foreign Institutional Shareholders FII / FDI, 53.94% SSKohli S. S. % of Top 10 shareholders Sr No Name Category Dec-12 Sep-12 1 Government of India Promoter 17.26% 17.3% 2 Sipadan Investments (Mauritius) Ltd. FII 9.98% 10.4% 3 Life Insurance Corporation of India FI 9.44% 10.0% 4 J.P. Morgan Asset Management FII 3.04% 2.9% 6 The Royal Bank of Scotland FII 2.85% 2.6% 5 Abu Dhabi Investment Authority FII 245% 2.45% 22% 2.2% 7 Actis Hawk Ltd FII 2.02% 2.0% 8 Vanguard FII 1.86% 1.9% 9 Flagship Indian Investment Company (Mauritius) Ltd FII 1.81% 1.7% 10 Government of Singapore FII 1.72% 2.0% 13 Shardul Shroff Gautam Kaji Omkar Goswami Donald Peck Marianne Økland Rajiv B. Lall Vikram Limaye Independent Directors Vice Chairman & Managing Director Deputy Managing Director

14 Core Team Ability to Attract the Best Committed to Indian Infra Shared Services Project Finance Fixed Income & Treasury Investment Banking & Institutional Broking Public Market Asset Management Rajiv Lall Vikram Limaye Sunil Kakar Sadashiv Rao Animesh Kumar Rajeev Uberoi Vinayak Mavinkurve Sanjay Grewal K Rajagopal Tapasije Mishra Naval Bir Kumar Vice Chairman and Managing Director Deputy Managing Director Group Chief Financial Officer Chief Risk Officer Group Head - Human Resources, Corporate Communication and Corporate Services, Co-CEO - IDFC Foundation Group General Counsel Group Head Project Finance Group Head Project Finance Head - Fixed Income & Treasury CEO, IDFC Capital & Securities Vice Chairman, IDFC MF Alternate Assets Management M. K. Sinha Managing Partner and CEO, IDFC Alternatives Satish Mandhana Managing Partner and CIO, IDFC Alternatives Cherian Thomas CEO - IDFC Foundation IDFC Foundation Pradeep Singh Group Head of Public Sector Initiatives Ritu Anand Group Head Policy & Chief Economist 14

15 The first to be classified as an IFC Infrastructure Finance Company norms IFCs are NBFCs with 75% of their total assets deployed in infrastructure loans Net owned funds of Rs 3bn or more A minimum credit rating of A CRAR of 15% and minimum Tier-1 capital of 10% 40 Single Borrow er Single Group 40 Exposure limit for lending to infrastructure projects (% of owned funds) Enhanced Exposure Norms 0 SCB IFC Better access to bank funds and ECBs Banks cap on lending to IFCs raised from 15% of capital funds (Tier 1+2) to 20% Risk weights of banks exposure to IFCs linked to their credit rating IFCs allowed ECBs (including outstanding ECBs) under the automatic route upto 50% of net owned funds and approval route available for beyond that Refinance from IIFCL 15

16 Business Structure Full Services Franchise for Infra Project Finance Fixed Income & Treasury Investment Banking & Institutional Broking Loan Book ~ ` 54,104 crore (CAGR of ~ 30% over 6 years) Major Sectors Energy (42%), Transport (23%), Telecom (23%) Project Loans, Corporate Loans, Structured Products, Non-Funded products Assets duration : 2.0 years Gross NPAs : 0.26%, Net NPAs : 0.12% Treasury Operations Liquidity Management Debt Trading (Money market instruments, Bonds) Book size of ` 8,265 crore as on December 2012 Equity Trading Debt Capital Market Registered with SEBI as Category-I Merchant Banker Debt Syndication Structuring, managing and arranging loan funds for infrastructure projects & sponsors Structured Debt Product Investment Banking Institutional Broking IDFC Research Coverage of ~ 240 companies across 27 sectors NUMBER OF EMPLOYEES AT IDFC GROUP IS ~559 : The largest pool of human talent focused on infrastructure in the country 16

17 Business Structure Full Services Franchise for Infra Public Markets Asset Management Alternate Assets Management IDFC Foundation Acquired from Standard Chartered in 2008 Natixis Global Asset Management acquires 25% minority stake AUMs : $ 5.4 bn Debt to Equity : 80:20 Market Share of 3.8% as of December 2012 Debt : 4.3% Equity 2.7% Ranked 10 th as of September 2012 based on Avg AUMs No of investors : 1 million + Flagship scheme : Premier Equity Fund AUMs : ` 8,172 crore Private Equity Established in 2003 AUM : ` 4,335 crore in 3 Funds 37 Investments with 10 full exits Project Equity Established in 2007 AUM : ` 3,837 crore in 1 Fund 68% of the fund committed 14 Investments Real Estate Established in 2010 Fund raising in process Seed assets in place Policy Advocacy India Infra Report 2012 : Education India Rural Development Report Capacity Building & Programme Management Training Govt officials in PPP Model Advisory Services Project Development Fund Triple I Capacity Building : I-Cap icare JVs Sneha, Masoom DIMTS (with GNCTD), ideck (Karnataka), Udec (Uttarakhand) SHARED SERVICES HR, IT, Finance, Legal & Compliance, Corporate Communication, Risk Management, Facilities, etc. 17

18 Strong relationships across Infra Punj Lloyd Ltd Shapoorji IPallonji 18

19 1 Indian Infrastructure directionally right but yet to regain momentum 2 IDFC riding a Megatrend within a Megatrend 3 IDFC Stakeholders 4 IDFC Financials 5 IDFC Unique Proposition 19

20 Impressive growth - Balance Sheet, Approvals and Disbursements Robust 31% CAGR in balance sheet size.....leading to strong 30% CAGR in outstanding disbursements 12 Balance Sheet ($bn) Total cumulative outstanding approvals ($bn) Outstanding disbursements ($bn) FY06 FY07 FY08 FY09 FY10 FY11 FY12 0 FY06 FY07 FY08 FY09 FY10 FY11 FY12 20

21 Robust credit selection processes and strong risk management practices have been a focus Robust Asset Quality Prudential Provisioning Norms : Loan Loss Reserves at 1.5% 0.6 Gross NPAs (%) Net NPAs (%) % 2.5% 2.0% 1.5% 1.0% 2.3% 1.6% 11% 1.1% 1.8% 1.8% 1.6% 1.5% % 0.0% FY06 FY07 FY08 FY09 FY10 FY11 FY12-0.5% FY06 FY07 FY08 FY09 FY10 FY11 FY12 21

22 Strong operating performance Current NIMs ~4% 38% CAGR in NII driving 26% CAGR in PAT 5.0 NIMs 450 NII PAT ($m) FY06 FY07 FY08 FY09 FY10 FY11 FY FY06 FY07 FY08 FY09 FY10 FY11 FY12 22

23 Strong operating metrics Best-in-Class RoAs and RoEs gaining traction Operational Efficiencies Playing Out : Cost/ Income well positioned and trending down 7.0% 0.0% 17.0% 17.7% 6.2 x 15.7% 12.5% 15.8% 13.0% 4.8 x 5.2 x 12.9% 5.0 x 5.0 x 4.4 x 5.0 x 3.8% 3.3% 3.4% 3.1% 2.6% 3.0% 2.9% FY06 FY07 FY08 FY09 FY10 FY11 FY % 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 10.2% 11.5% 19.2% 23.6% 26.0% 20.9% 17.5% RoA Leverage (Closing) RoE 0.0% FY06 FY07 FY08 FY09 FY10 FY11 FY12 GOING FORWARD : Potential RoAs ~2.6 to2.8%; Potential Leverage ~ 6.25x and Potential RoEs ~16 to18% 23

24 Financials Update : Balance Sheet : Strong 9MFY13 Particular 31-Dec Sep Mar Dec-11 Y-o-Y % Growth (Amounts in ` crore) Q-o-Q Networth 13,614 13,152 12,285 12,430 10% 4% Borrowings 51,634 53,680 46,435 43,729 18% -4% Current Liabilities 3,675 2,998 2,259 1,858 98% 23% TOTAL LIABILITIES 68,923 69,831 60,979 58,016 19% -1% Net Loan Book 53,325 53,381 48,185 43,826 22% 0% Gross Loan Book 54,104 54,137 48,888 44,476 22% 0% Less Provision % 3% Treasury 1 8,265 9,014 6,612 6,661 24% -8% Consol Equity 1,2 3,029 2,999 2,993 2,999 1% 1% Current Assets 4,304 4,436 3,189 4,530-5% -3% TOTAL ASSETS 68,923 69,831 60,979 58,016 19% -1% 1 Net of provision 2 Goodwill on consolidation as of Dec 31, ` 957 crore 24

25 Financials Update : P&L : Solid 9MFY13 (Amounts in` crore) Particular 9MFY13 9MFY12 % Growth Q3FY13 Q2FY13 Q3FY12 % Growth Q3 Vs Q3 Q3 Vs Q2 Net Interest Income 1,921 1,511 27% % 2% Loans 1,762 1,340 31% % 2% Treasury % % -4% Non-Interest Income % % -15% Principal Gains % % -85% Asset Management % % 27% Mutual Fund % % 13% Alternatives % % 45% Fees % % 1% VC Gain & Carry % % na Investment Banking & Broking % % -61% Investment Banking % % -89% Institutional Broking % % -13% Fixed Income* % % 53% Loan Book Related fees % % -12% Other Income % % 56% OPERATING INCOME 2,459 2,255 9% % -2% OPERATING EXPENSES % % 8% HR % % 17% Non-HR % % -2% Provisions % % 73% Loans % % 25% Investments % % 535% PBT 1,900 1,682 13% % -7% Tax, Minority int, etc % % -11% PAT 1,310 1,219 7% % -5% PAT (net of principal gains) 1, % % 4% * Includes Fees & Treasury trading gains 25

26 1 Indian Infrastructure directionally right but yet to regain momentum 2 IDFC riding a Megatrend within a Megatrend 3 IDFC Stakeholders 4 IDFC Financials 5 IDFC Unique Proposition 26

27 IDFC is uniquely positioned Mirrors the Infra Opportunity! Franchise amalgamates Government sponsorship Infrastructure Internationally diversified shareholder base Professional management 27

28 IDFC poised to ride the next infra wave of investments Strongly capitalized Capital Adequacy Ratio at 22.4% Tier-1 capital 20% Infrastructure set to witness increased dlevels l of activity i Sale of assets by existing private players to deleverage stretched balance sheets Capital raising by private developers to fund next phase of infrastructure investments Consolidation among existing industry players Emergence of new entrants in the infrastructure space both domestic and foreign 28

29 Best-in-class franchise best placed to harvest the infra opportunity Robust systems and processes and highest standards in transparency and governance Can tap opportunities and identify risks early Superior underwriting skills market recognizes and respects that Robust Asset Quality low NPAs Superior operating metrics cost/ income progressively trending down Exemplar PPP Strong Government ownership, ~50% overseas shareholders, professionally managed and amongst best Boards in India IDFC Calibrated growth over time resulting in stronger balance sheet (grew only 2% in FY2009) : ~80% of portfolio relates to operational assets IFC benefits on borrowings : Well positioned on the liabilities side of the balance sheet Talent focused firm : has the largest pool of human talent focused on infrastructure in India 29

30 30 Thank you