(Reuters) - The Saudi-based Islamic Corporation for the Development of the Private Sector (ICD) said on Monday it had halted plans for a $1 billion fund with Infrastructure Leasing and Financial Services Group (IL&FS) while the Indian firm undergoes a restructuring.
The Indian government took control of IL&FS this month after the infrastructure financing and construction company defaulted on some of its debt obligations, sparking fears of wider contagion in the country’s financial sector.
In January, the ICD signed a shareholder agreement with the private equity arm of IL&FS to launch an Africa-focused infrastructure fund with $105 million in seed capital and a target first close by the middle of this year.
“After a careful review of the recent development on IL&FS, we have decided to put this project on hold,” ICD, the private sector arm of the Islamic Development Bank Group, said in a statement emailed to Reuters.
“However, financing infrastructure in Africa is a priority for ICD and we will continue to work with our partners to find effective solutions to achieve this important objective,” the statement said.
The ICD is a multilateral development institution that supports the economic development of its 53 member countries.
The proposed fund would have financed small to mid-sized projects in ICD member countries, targeting sectors such as power and transportation.
The Indian government replaced the IL&FS board this month and has said it will consider all available options to revive the company.
Reporting by Bernardo Vizcaino; Editing by Darren Schuettler