British private-equity firm 3i Group Plc plans to launch a $1.5 billion infrastructure fund for India next year, its chief executive said, as it looks to boost investments in sectors such as power, ports and roads.
3i had launched in 2008 a $1.2 billion fund for investment in infrastructure companies in India, and the private-equity group has already invested about 80 percent of that fund, Michael Queen said on Thursday.
“On the infrastructure side, India is the only country in the world where we have a dedicated country fund because the sheer growth opportunity here is more than anywhere else,” Queen told Reuters in an interview.
3i’s portfolio firms in India include Adani Power, an Indian independent power producer, which was listed in a $610 initial public offering in August 2009 and whose shares have risen nearly a third since then.
Last month, GVK Power & Infrastructure Ltd said 3i would invest 8 billion rupees ($177 million) in its energy unit GVK Energy.
“For an organisation like us…it looks like a very, very attractive market,” Queen said, referring to the Indian market.
Asia’s third-largest economy has said it needs to double infrastructure spending to $1 trillion in the five-year period starting 2012, with private sector investment contributing a significant share.
India spends about 6 percent of its GDP on infrastructure, less than several countries in Asia, and nearly half of the 11 percent invested by larger rival China.
Private equity activity is surging in India, with $6.57 billion invested in the first three quarters of 2010, more than double the $2.5 billion invested during the same period last year, according to Venture Intelligence, a research firm.
Private-equity firms typically make minority investments in India, where entrepreneurs are often reluctant to sell out and where full buyouts are rare.
The appetite of the private-equity players is increasing in areas such as roads, power, ports, logistics and energy, as they bet on a rapidly growing Indian economy to fuel demand for infrastructure in the years ahead.
AMP Capital Investors, a unit of Australia’s No. 2 wealth manager AMP, is planning to invest about $200 million in the Indian infrastructure sector over the next two years, a senior official said in September.
3i plans to look for investment opportunities in “social infrastructure” builders, including education and healthcare companies, Queen said, as it continues to focus on power, airport and port assets.