<div id="readability-page-1"><div>By Khushi Malhotra DEG, German state-run lender KfW's development finance unit, plans to grow its India portfolio to 900 million euros ($1.07 billion) over the next few years, betting on the country's growth outlook and relatively stable macroeconomic backdrop, a senior executive said. KfW has a balance sheet size of 550 billion euros, as of December 2024, while DEG, which operates across Asia, Africa, Latin America and parts of Eastern and Central Europe, has a portfolio worth 12 billion euros.DEG's India book currently stands at about 540 million euros in equity and debt investments.&#34;India is one of the top-three investment destinations for DEG,&#34; Kunal Makkar, DEG director–India, told Reuters in an interview last week, adding that the country accounts for about 5% of DEG's global portfolio and the institution plans to raise it to 7% in 3-4 years. India's economy has so far withstood punitive U.S. tariffs imposed by President Donald Trump, with growth forecasted at 7.4% for the year ending March 31, above the government's initial projection of 6.3%-6.8%. While trade negotiations with the U.S. have stretched out, India and the European Union recently concluded a trade deal.Following the trade deal and given India's stable inflation and growth dynamics, DEG sees scope for widening its India investments, Makkar said.It plans to split new investments evenly between debt and equity, shifting from the current mix of roughly 65% equity and 35% debt, he said. DEG cannot currently provide rupee-denominated debt, limiting participation in India's onshore bond market, but is looking to lend to Indian firms tapping the offshore or dollar bond market, Makkar added.It prefers to lend to private sector companies across sectors such as infrastructure, renewable energy, financial institutions, primarily non-banking financial companies, and manufacturing and agriculture. The institution's average investment size has been 25 million euros so far, and it is open to larger deals worth 50-75 million euros, Makkar said, including syndicated deals with peers and investments via debt fund structures with more equity-like features. The firm recently backed Vivriti Asset Management's asset-backed securitisation fund in GIFT City, marking its first India debt fund investment.Return targets vary by product, with the institution seeking &#34;high-teen&#34; equity returns, 11%–13% in euro terms for mezzanine investments, and 2%–3% over SOFR for debt, the executive said. SOFR (Secured Overnight Financing Rate) is the U.S. Fed's benchmark for overnight U.S. dollar borrowing costs collateralised by Treasury securities.($1 = 0.8377 euros)</div></div>

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DEG, the development finance unit of German state-run lender KfW, plans to increase its India portfolio to €900 million ($1.07 billion) in the coming years, focusing on India's growth potential and stable macroeconomic conditions. Currently, DEG's India investments total approximately €540 million. The institution aims to raise India's share in its global portfolio from 5% to 7% within 3-4 years, with plans to balance new investments between debt and equity. DEG prefers lending to private sector companies in sectors like infrastructure and renewable energy, targeting high returns on equity and competitive rates for debt investments.

Reuters

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Germany's DEG plans $1 billion portfolio across India investments, top exec says