The Hindu Business Line : SBI, Macquarie, IFC enter pact to float $2 b fund

Debt line
Partners bring in $450 m to start the fund.
Strong pipeline of investment opportunities identified.
ICICI Bank, Axis Bank look to launch similar funds.

Our Bureau

Mumbai, April 16 State Bank of India in a tie-up with Macquarie Group and the International Finance Corporation is floating a $2-billion fund for investment in infrastructure in India. The partners together bring in $450 million to start the fund and the balance will be raised from international and domestic investors.

SBI and Macquarie on Wednesday signed an agreement to set up a fund management company, the bank said in a release here.

The fund, scheduled for launch by the end of the second quarter of 2008, will provide equity and mezzanine debt instruments like fully convertible and optionally convertible debentures for investment in roads, ports, airports and power.

It will also look at investment opportunities in infrastructure-related assets and businesses such as logistics companies, and railway rake companies which provide forward and backward closure to infrastructure, said an SBI official. Macquarie and SBI have already identified a strong pipeline of investment opportunities which were under assessment, he said.

The fund is expected to have its first closure in the next six months, followed by multiple closures for international investors in the next 12-18 months, the official said.

As the primary sponsors of the fund, SBI and Macquarie will create a partnership for the sourcing and execution of direct equity investments in India’s infrastructure market.

Macquarie and SBI’s joint deal origination capacity will be backed by their infrastructure-related experience and knowledge in the global and Indian markets respectively.

According to a banking analyst, SBI’s decision to join hands with Macquire is probably because private equity is a new business segment for the country’s largest public sector bank and it lacks expertise in this area.

The press release said that Macquarie is a global leader in the infrastructure finance sector with 116 infrastructure assets under management across 25 countries.

ICICI Bank and Axis Bank are two other banks that are also looking at launching similar infrastructure funds.