Aseem Infrastructure Finance (AIFL), which specialises in funding infrastructure projects such as roads, green energy, transmission, logistics, etc, has built a high-quality asset book close to Rs 140 billion. Further, AIFL’s deep domain expertise and project assessment skills are its calling cards. To know what sets it apart, its contribution to the infrastructure investment pipeline and to gain an insight into its contribution towards sustainable growth, R SRINIVASAN spoke to Virender Pankaj, Chief Executive Officer (CEO), Aseem Infrastructure Finance. Excerpts:Aseem Infrastructure Finance (AIFL) is registered with the RBI and has been granted the Certificate of Registration to deepen the infrastructure investment pipeline. How does the NIIF-backed shadow bank raise resources to fulfil its infrastructure financing needs?When we started AIFL, we were clear that we are building an institution that has to sustain itself for over the next 100 years to come and that it has to be an infrastructure thought leader. For me, out of 32 years in the debt space, the last 20 have been dedicated to the infrastructure space, and so is the case with our highly skilled, deeply experienced specialist team. In India, only eight companies undertake dedicated infrastructure lending. Of these, five are mainly owned or managed by the Government of India (GoI). Aseem, too, has anchoring investment from GoI and is a professionally managed company operating like a responsible commercial organisation. In any business there will always be a key role for knowledge-based players who understand the sector deeper than others. The rest of the players [banks or other NBFCs] are not specialists offering so many other products that they reprioritise periodically. Our specialist, long-term commitment to infrastructure differentiates us.On the funding side, AIFL has investors such as GOI, NIIF and Sumitomo Mitsui Banking Corporation (SMBC). AIFL is further raising its next round of equity and seeing interest from global fund houses. Investors are responding positively, given the best-in-class governance standards, best portfolio rating in the sector and strong growth of AIFL. In its short history since inception, AIFL has been able to build a high-quality asset book close to `140 billion. Our focus has been on sustaining a low credit cost business model, basis specialist underwriting and asset monitoring skills. Our structures are typically cash flow-backed with tight controls to ensure the lender’s risk is mitigated. The twin philosophy has been the foundation stone for AIFL’s lending practice and is appreciated by all stakeholders. Further, AIFL is a climate-positive lender with 50 per cent of its assets under management (AUM) in green projects such as renewable energy, electric vehicles (EVs), water treatment, etc, which reflects our commitment and contribution towards sustainable growth.AIFL specialises in funding projects such as roads, power transmission, green energy and logistics. Which other sectors have been selected for disbursal?Currently, the sector construct and size requirements make renewables and roads the most active avenues and account for a large share of our loan book. However, as a full-service infrastructure lender, our philosophy is to support all sectors that are part of the infrastructure story where risk frameworks are stable and help build tomorrow’s India. Climate funding remains a key focus area for us; alongside, we are also equally active in other sectors such as roads, airports, EVs, etc. As for the sunrise sectors we keep evaluating upcoming sectors such as data centres, smart metering, etc, given their increased importance in today’s data-driven world. We are open to new developments in the infra sector and understand and advocate bankable solutions to ensure the growth of new, upcoming segments and our clients.Can you provide an insight into AIFL's long-term Green goals within the infra finance sector, along with their monetary value, in the next few years?At present, AIFL has more than 50 per cent of its portfolio into climate funding. We are very focused on the environmental and social (E&S) impact of our funded projects and right from inception, E&S assessment has been a key part of our appraisal process. Being part of our founding philosophy, we see this as important when assessing credit risks. We see climate-positive finance accounting for more than half our portfolio going forward as well.What sets AIFL apart in terms of its approach to infra finance?Our deep domain expertise in infrastructure sectors and project assessment skills on the technical and financial structuring fronts are our calling cards. We do not have a templatised approach but believe in offering customised debt financing solutions with risk-mitigated structures and controls in place. As AIFL is a specialised player with a team having decades of experience in the Indian infrastructure space, our vision is to be a thought leader that the industry would benchmark itself against in years to come. We also approach our peers as future partners and work well with all other lenders including Indian and foreign banks, NBFCs and financial institutions while co-underwriting or down-selling our solutions.Is there a need to give power transmission the same benefits as green finance?We have always supported transmission, given its force multiplier effect. As transmission infrastructure is pivotal to the energy sector, classifying the same as green finance would help attract more equity and debt capital, leading to an overall boost to the power segment. A case for transmission being treated as green stems from the fact that, incrementally, almost all transmission projects are expected to transmit green energy given India’s evolving energy mix.How are reliable service partners leveraged to ensure asset enhancement to meet stakeholder needs while managing rising costs?We believe all our clients would speak for us in this regard. Essentially, this comes from a well-calibrated, balanced approach taking into consideration the requirements of all stakeholders. To elaborate, risk mitigation helps equity investors in the infrastructure sector as much as it helps lenders; so, the alignment of interest is natural. India has seen significant rise in interest costs but our financing structures have withstood the impact very well and projects have been able to service the increased cost of debt without any cashflow problems as the estimation has been spot on.What evaluation mechanisms does AIFL use to monitor the progress and impact of crucial, big-ticket projects?There are internal diligence procedures set for monitoring all assets. We keep track of the operational or financial progress of projects on a monthly or quarterly basis. We also conduct site visits for projects to understand early-stage risks, if any. AIFL also conducts an intense review of its portfolio and each asset is closely monitored for performance and ESG impact through the project lifecycle.What are the challenges in large-scale projects?Predevelopment works, land acquisition and approvals are key to ensure timely completion for any large-scale infrastructure project. The quality of the execution team and key contractors also plays an important part.Also, what risk-sharing mechanisms are in place?Deep diligence and well-thought-out structures addressing identified or anticipated risks are some of the mechanisms. For any refinancing risk, our approach is simple: the best mitigation is the project’s underlying strength and resilience. Market conditions determine the cost of refinancing. It is the inherent strength of a project. We only support projects where we would ourselves be comfortable in refinancing from a credit perspective. We factor these elements while structuring.What role do technologies (AI, etc) play in enhancing AIFL’s role?Technology is already playing a key role in the finance industry through learning management systems (LMS), customer relationship management (CRM), data platforms, such as Credit Information Bureau (India) (CIBIL), etc. AI can further help in assessing the risk related to projects by analysing large datasets and help eliminate or select projects at an early stage based on important indicators. It is already playing an important role in monitoring and maintaining assets. For instance, most of our clients have network operation centres (NOC) to monitor assets and the system itself is providing real-time resolution responses from a centralised location. All new road projects have ATMS systems, ensuring user centricity. Reports from such centres can further be analysed by lenders as part of monitoring. Overall, AI is a key support tool for lenders like us to enhance appraising and monitoring capability through data analytics, documents maintenance and AI-enhanced loan management systems.Which sectors and asset classes will see maximum growth?As India is targeting to become the world’s third largest economy, physical and digital infrastructure along with connectivity are fundamental requirements and will see growth going forward. With corporations now focusing on a green economy, there will be a higher requirement for renewable projects as well. Talking about specific sectors, we see core sectors such as renewables continuing as one of the key sectors. More green energy will require more investment in transmission and distribution (T&D) as India moves towards One Nation One Grid. Transportation, i.e., roads along with airports, will continue to see strong traction with many greenfield airports coming up in the next five years. Major cities would get second airports. Among the emerging sectors, data centres, electric mobility and green hydrogen hold promise.