India's state-owned lender to power projects, Power Finance Corporation (PFC) has entered into an agreement with Tata Capital to set up a USD one billion private equity (PE) fund in joint venture.

The joint venture will aim at funding in equity of private power projects. Tata Capital will be the majority stake holder with a 51 per cent stake while PFC will hold 49 per cent stake in the joint venture which is expected to have an initial pool of USD 1 billion for making investments.

PFC Director Finance R Nagarajan said, "We have selected Tata Capital as our joint venture partner for setting up a PE fund... in which they would be having 51 per cent stake and PFC 49 per cent. PFC is in the process of finalising the JV terms. The fund is expected to become operational over the next six-nine months period."

PFC has already started funding for boosting availability of fuel sources like coal mine, coal transportation facility, and creating gas pipelines infrastructure. PFC has a target for sanctions of Rs 45,140 crore this fiscal year and it has already sanctioned Rs 41,732 crore.

Estimates show that the Government of India is targeting an investment of Rs 45 lakh crore in infrastructure sector under the 12th Five Year plan. Out of the total Rs 45 lakh crore, about Rs 14 lakh crore is expected to be in power sector.