Karandaaz, InfraCo sign deal to set up InfraZamin

LAHORE: Joint Venture of Karandaaz Pakistan and InfraCo Asia Investments Singapore signed an agreement for establishing a company InfraZamin Pakistan to ensure easy bank financing for long-term projects of the private sectors with an average project size of Rs5 billion.

Karandaaz CEO Ali Sarfraz talking to The News said that the private sector was facing huge issues in getting project financing, as in majority of cases, the banks give loan for the period of five years.

However, returns from these mega projects not start within five-year times, which resulted in bad debts and other financial issues. Both Pakistani and Singaporean companies made equity investment for creation of InfraZamin Pakistan, a Security and Exchange Company Pakistan regulated company.

Ali said that objective of the InfraZamin is to fill the current gaps in the local credit markets to catalyse greater private sector participation in the long-term, local currency financing of infrastructure in Pakistan, as an initiative of the Private Infrastructure Development Group (PIDG).

The InfraZamin will be providing guarantees to enhance the credit quality of local currency debt instruments to finance creditworthy infrastructure projects in Pakistan, he added.

Ali said the InfraZamin incorporated as a private limited company will operate on a commercial basis guided by international best practices and local governance standards. Its board of directors will include representatives of InfraCo Asia, Karandaaz, and GuarantCo.

Pakistan spends only 2.1 percent of its GDP on infrastructure as against 8 percent to 10 percent requirement. This resulted in widening infrastructure deficit, he said.

InfraZamin Pakistan will not only unlock capital; thus, boosting the much-needed investment in infrastructure, but also add to the sophistication of Pakistan’s financial architecture. The additional investments will support economic growth, create jobs, and ultimately reduce poverty, besides invigorating Pakistan’s capital markets through cutting-edge financial instruments.