International Finance Corporation (IFC), the investment arm of World Bank, will make a seed

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investment of about $4 million for an upcoming non-banking finance company, FinCo, which would focus on clean energy and environment projects.

Tata Capital would be the key sponsor of FinCo, which would provide debt financing and advisory services for small and medium enterprises (SMEs) in areas like renewable energy, sustainable water and sanitation and waste management, energy efficiency, environmental cleanup, carbon finance, emissions reduction, effluent disposal etc.

The initial capitalization of FinCo would be up to $20 million. The proposed equity investment by IFC is for the acquisition of up to 20 per cent stake in FinCo, which works out to $4 million. Other private investors in the company would include local and international institutions that will be identified shortly.

FinCo will be headquartered in Mumbai and have operations throughout the country.

Apart from financial support, IFC will also help FinCo select international partners by leveraging its extensive global network and will, over time, support FinCo to raise financial resources to fund its business, particularly medium to long-term debt.