The Hindu Business Line : Infrastructure fund keen on stake in airport upgrade

THE $100-million India Infrastructure Fund (IIF), jointly launched by Manila-based Asian Development Bank and Australia-based AMP Life Ltd to make available infrastructure investments, would also have an eye on taking stake in modernisation and expansion of Indian airports once the sector is thrown open for private operations.

Speaking to Business Line on the sidelines of the AMP-ADB India Infrastructure Fund launch function,, Mr Krishan Seghal of AMP Capital Investors, the infrastructure division of AMP, said, "We might look at the privatisation of airports in India" for investment participation.

"When people form a consortium to bid for that, we will also be interested, both as an investor and somebody with knowledge about airport investment as we have good experience in the Melbourne Airport operation as part-investor in it," he said.

Mr Seghal explained that the first IIF was launched by AMP in November 1999, with AMP Capital Investors as advisors, to invest in a diverse range of infrastructure sectors in India. The company since inception has achieved an internal rate of return of 37 per cent and the IIF recently wound up its first partial exit through the float of Indraprashtha Gas Ltd (IGL).

He said IGL experience in providing compressed natural gas (CNG) in Delhi has made the company confident of "replicating" the experience in CNG gas distribution projects in other parts of India too, if more such projects are put up by private companies.

Stating that both directly and indirectly, AMP exposure in Indian infrastructure projects totalled $200 million, Mr Seghal said the projects include Bharti Telecom, IGL, Tata Teleservices in Maharashtra and Gujarat Pipavav port.

Further, he said, "We would also like to take part in the consolidation story that is happening in India's telecom industry." For instance, he said, if existing telecom companies like to buy smaller operators in some circles through acquisition, AMP's proposed IIF would help in merger and acquisition too. Besides, telecom-related investment such as projects for broadband would also be taken up for focused investment, he added.

He said the Infrastructure Fund of India (IIFI) is expected to rope in $100 million with a cap of $125 million, from institutional investors. ADB and AMP Life are initial investors in the fund with $15 million and $30 million invested, respectively.

Mr Seghal said the proposed IIF also proposes to pump in "$10 million in a single project which would be less than 20 per cent of the company's share capital," and the projects to be invested in private sector include power, transport (toll roads, railways, ports and airports), telecom (wire line and wireless networks) and urban facilities (water and sewage networks).

AMP Capital Investors' Head Infrastructure (Private Capital) Mr Philip Garling, said, "We recognise that India is growing very quickly, and for world-class infrastructure, it is absolutely fundamental to supporting continuous growth in India."

As more and more private investors take part in infrastructure programmes, the "political decision" by the Government would be dictated by the logic of ensuring that the actual cost of providing investment by the private operators need to be recovered, he said. Bolstered by the initial success of the IIF, the second infrastructure fund for India, with a corpus of $100 million, is designed to achieving investment returns of at least 20 per cent per annum, Mr Garling said.