Infrastructure India Plc (IIP), an India focused infrastructure fund by Iceland’s Kaupthing Bank, was listed on the Main Market of the London Stock Exchange on Monday. The fund has raised £36.7 million or $73.2 million from the listing. Kaupthing Singer & Friedlander Capital Markets Ltd acted as financial adviser and broker to the company, while Smith & Williamson Corporate Finance Ltd acted as sponsor.
The Isle of Man-registered IIP is a closed-ended investment company formed to invest in India’s infrastructure sector. The company has already acquired a 20.5 per cent stake (which is expected to adjust to between 6 and 7 per cent after dilutions) in Shree Maheshwar Hydel Power Corporation Ltd, which was specifically set up to own and develop a 400MW hydroelectric power project situated in Maheshwar, in the southwestern region of Madhya Pradesh. The stake was bought for $26 million. IIP has an option for further investment in this project.
The other projects identified are a portfolio of roads and a bid with Punj Lloyd Ltd. The company has developed a further investment pipeline of other potential opportunities with an equity value of approximately $270 million (Rs 1,110 crore). This pipeline includes renewable and conventional power projects, road portfolios and airport assets.
The 11th Five Year Plan (2007-2012) has set the GDP growth target for this period at 9 per cent per annum. This will require investment in infrastructure of $488 billion and the share of private sector in this is expected to be around 30 per cent.
IIP plans to focus on purely equity investment at the SPV level in infrastructure assets. Also it plans to invest in assets close to the commencement of operations, typically within 18 months of planned commercial operation. Typically investments will be in the range of $20-$60 million.
Bloomsbury Asset Management Advisors (BAMA), headed by Gary Neville - previously at John Laing plc, one of the largest publicly quoted infrastructure investors in the UK at the time - will act as investment adviser, with responsibility for identifying, structuring and monitoring investments and advising on exit strategies.
BAMA will subcontract some services including aspects of origination and management services to Cornerstone, a subsidiary of Bridge Capital Realty Pte. Ltd. Kaupthing acted as financial adviser and broker for this listing. Interestingly, Kaupthing has a 20 per cent stake in Bridge Capital Realty.
Commenting on IIP’s fundraising and admission to trading on the London Stock Exchange, Rupert Cottrell, Non-Executive Chairman of Infrastructure India plc, said: “The growth prospects for India provide a compelling rationale for investment in the Indian infrastructure sector at this time. We have put in place a team with extensive experience in infrastructure fund management and a strong track record in value creation…The funds raised will be used to invest in the initial projects we have identified with the expectation that negotiations on other energy and transport projects will reach an advanced stage during the remainder of this year.”
IIP plans to invest in assets that are expected to generate a base IRR of 15 per cent per annum but the objective is ultimately to achieve an aggregate IRR of up to 25 per cent per annum. (More details in this)