IFC to provide loan worth €135 million to Volkswagen India

International Finance CorporationInternational Finance Corporation (IFC), a member of the World Bank Group, plans to invest €135 million in Volkswagen India's plant in Pune.

Under the proposed deal, IFC will provide a loan of up to €60 million from its own account and a syndicated loan of up to €75 million.

It should be noted that Volkswagen India's has recently inaugurated its plant at Chakan. The facility which is being set up at a cost of €580 million has a capacity of 1.10 lakh units a year.

According to information on IFC's Web site, the company may consider an equity or quasi-equity component within the proposed €60 million investment.

According to IFC, its role in the project includes providing and mobilizing long-term financing and providing local currency financing through swap intermediation, which the group thinks may be difficult to find under the ongoing market conditions.

Apart from providing loan, IFC has plan to explore the possibility of offering advisory services to further develop Volkswagen's local supplier base.

Established in 1956, Washington DC-headquartered IFC is the largest multilateral source of loan and equity financing for private sector projects in the developing world.

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