London-based private equity and venture capital firm 3i Group has announced plans to establish the 3i India Infrastructure Fund to apply the investment strategy of 3i’s global infrastructu
London-based private equity and venture capital firm 3i Group has announced plans to establish the 3i India Infrastructure Fund to apply the investment strategy of 3i’s global infrastructure business to the rapidly growing Indian infrastructure market. The fund is the first to be established under the strategic partnership agreement announced by 3i and the India Infrastructure Finance Company last April.
The fund, which will be unlisted, aims to build a balanced portfolio of infrastructure investments in India and has a target size of USD1bn. It will invest primarily in power, ports, airports and road projects in early-stage and mature infrastructure operations, with 3i’s network and its strategic partnership with India Infrastructure Finance providing access to a strong pipeline of attractive investment opportunities.
3i plans to invest a minimum of USD250 million in the fund, with its listed fund 3i Infrastructure, which is advised by group subsidiary 3i Investments proposing to invest USD250 million in the India fund subject to shareholder approval. Other commitments will be sought from third-party investors to achieve the fund’s target size.
India is among the fastest growing economies in the world, 3i notes. Its government estimates that investment in infrastructure will need to increase from 3.5 per cent of GDP at present to 8 per cent of GDP in 2012 and expects infrastructure investment to total around USD320bn over the next five years.
3i has an established presence in India, with a team of 10 investment and advisory professionals based in Mumbai. The team has invested a total of USD325 million in India since 2005 in a range of sectors including real estate, media and automotives and, in the infrastructure sector, power and ports.
The group has a strong track record of infrastructure investment and significant experience of working with governments and the public sector, and has built a 20-strong infrastructure team working out of Mumbai, Singapore, London, Frankfurt and New York.
‘India offers tremendous growth opportunities for infrastructure investment,’ says infrastructure managing partner Michael Queen. ‘3i, through its global network and within the framework of the strategic partnership, is optimally positioned to source attractive investment opportunities in the Indian infrastructure market and to deliver value to its shareholders and investors in the fund.’
Adds chief executive Philip Yea: ‘Today’s announcement is another very positive step in the development of our infrastructure business globally and also further accelerates our growth in Asia and India in particular.’
3i focuses on buyouts, growth capital, venture capital and infrastructure investment in Europe, the US and Asia. The group has invested in infrastructure businesses for more than 20 years and recently raised GBP700m for the listed 3i Infrastructure company. 3i’s track record in infrastructure includes investments in Anglian Water, the fourth largest water company in England and Wales, an interest in Infrastructure Investors, one of the largest UK equity funds investing in secondary private finance initiative projects, and investments in two other PFI projects.
