UPDATE 1-Tata Group may raise $1 bln infra fund by year-end

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MUMBAI, May 27 (Reuters) - India's Tata Group hopes to close a $1 billion infrastructure fund by the end of the year as it lines up plans to make heavy investments in the country's high potential infrastructure and real estate sectors.

The fund opened in mid-2008, but has only recently seen strong interest from Asian and European investors, with firm commitments for about a quarter of the total, Kishore Saletore, chief financial officer of Tata Realty and Infrastructure Ltd, told reporters.

"This will meet a large part of our equity and debt requirements... elections were a decisive factor and investors are very excited," he said.

Tata Realty, wholly owned by group holding firm Tata Sons, on Wednesday outlined plans to invest about 200 billion rupees ($4.2 billion) over three years, focusing on urban infrastructure such as roads, airports, metro rail, and large real estate projects.

There will be 110 billion rupees for real estate and retail, about 50 billion rupees for road projects, and another 40 billion rupees for other infrastructure.

The company will use funds from the offshore infrastructure fund and from a $700 million realty fund raised in Dec 2007 for investing in projects.

"Additionally, we could look at strategic investors. Besides, our partners in individual projects will also bring in funds," Saletore said.

The company said it won its first road project earlier this week, a 14 billion rupee highway expansion in western India.

It is also developing an infotech-focused special economic zone (SEZ) in southern India, jointly with group firm Indian Hotels (IHTL.BO), and two more in western India for outsourcer Tata Consultancy Services (TCS.BO).

Tata Realty has also bid for several planned metro, airport and monorail projects, Saletore said.

India has said it needs about $500 billion over five years to 2012 to overhaul its crumbling infrastructure and sustain growth. ($1=47.7 rupees) (Reporting by Prashant Mehra; Editing by John Mair)