The Hindu Business Line : 3i Group’s infra fund exceeds $1-b target

In the pipeline
Citigroup, Blackstone and IIFC floating venture to raise $5 b.
ICICI Bank plans to launch a $2-billion fund.
Australia’s Macquarie Bank, IFC lining up $1-b Infrastructure Opportunities Fund.
Power Finance Corp draws up plans for $1-b ‘India Power Fund’.

Anil Sasi

New Delhi, April 7 Despite prospects of an economic slowdown, the infrastructure sector still continues to be a big draw among foreign private equity investors.

Europe’s biggest publicly-traded buyout and venture capital firm, 3i Group Plc’s ‘3i India Infrastructure Fund’ had exceeded its $1-billion target. A final closing of the fund is slated to be announced later this month, industry sources said.

The response from investors to the fund, which is among the largest India-focussed core-sector funds raised so far, could augur well for some of the other big-ticket infrastructure funds in the offing, including an joint initiative being floated by Citigroup, Blackstone and State-owned India Infrastructure Finance Company Ltd (IIFCL) to raise a $5- billion fund and ICICI Bank’s plans to launch a $2-billion fund.

Investor confidence

According to industry players, the response by Limited Partners (who subscribe to private equity funds) to the 3i India Infrastructure Fund is an indication of investor confidence in the India growth story.

Other funds, with plans on the anvil targeting the infrastructure sector, are also likely to go ahead with their mega fund-raising efforts.

This could, in effect, put to rest all apprehensions of a scaling down of the quantum of core sector fund-raising by private equity players in view of the prospects of a slowdown in the economy and subdued investor sentiment.

The 3i India Infrastructure Fund, which had its first close in September last year with $500 million in commitments from cornerstone investors – 3i Group and 3i Infrastructure Ltd, is the first to be established within the framework of the strategic partnership agreement announced by 3i and the India Infrastructure Finance Company Ltd (IIFCL).

The Fund will primarily focus on power, ports, airports and road projects in early-stage and mature infrastructure operations.

It will remain unlisted unlike the parent 3i Group or its sister concern – 3i Infrastructure Fund, both of which are listed on the London Stock Exchange.

Besides these funds, Australia’s Macquarie Bank Group and the International Finance Corporation are also in the process of launching a $1-billion ‘Macquarie India Infrastructure Opportunities Fund’, while Power Finance Corporation’s $1-billion ‘India Power Fund’ is also on the horizon, industry players said.

In 2007, about a third of all private equity investments into India were focussed on real estate, followed by banking and financial services, and manufacturing sectors.

The infrastructure sector has more or less been on the backburner for PE firms so far. The slew of mega billion-dollar plus funds promises to change that, contend industry players.

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