| MUMBAI, April 27
MUMBAI, April 27 India's Infrastructure
Development and Finance Co is in the early stages of
raising $1 billion-$1.5 billion for a new fund to invest in
infrastructure in the country, two sources with direct knowledge
of the matter told Reuters.
The funds will be raised for IDFC Project Equity, in which
Citigroup and India Infrastructure Finance Co., a
state-owned infrastructure finance firm, are key investors, the
The company already has a project equity fund, which manages
about $930 million in roads, ports, airports and power projects.
The new fund, which is set to be launched in the second half
of this year, will also invest in such projects, said the
"We have invested nearly 80 percent of our first fund and
exited a couple of investments. Now, we are looking to launch
the second fund," said one of the sources.
An IDFC spokeswoman declined to comment.
The previous fund drew investors from India, the United
States, Canada, Europe, Japan and the Middle East, and the new
fund will target investors in the same places, one of the
The existing IDFC Project Equity fund is part of the $5
billion India Infrastructure Financing Initiative announced in
early 2007 by IDFC, Citigroup, Blackstone Group and India
Infrastructure Finance Company (IIFCL). The initiative was to
have a $2 billion equity component and $3 billion debt portion.
However, Blackstone later pulled out of the venture.
Several private equity groups, including the 3i Group PLC
and a fund jointly managed by India's State Bank of
India and Australia's Macquarie Group, are on
the road to raise India infrastructure funds worth a combined
$4.5 billion, sources have said.
Others raising India infrastructure funds include the
private equity arms of no.2 Indian lender ICICI Bank
and Kotak Mahindra Bank.
Private equity investments in Indian infrastructure fell 60
percent to $183 million in 10 transactions during January-March
quarter compared with $459 million in 16 transactions a year
ago, according to industry tracker VCCircle.com, as policy
concerns and slowing growth dampened sentiment.
Poor infrastructure acts as a bottleneck to India's economic
growth, which slowed to 6.1 percent in the December last
quarter, the weakest annual pace in almost three years.
India wants the private sector to invest hundreds of
billions of dollars in infrastructure over the next five years.
But bureaucratic red tape, a lack of domestic long-term debt
and battles between farmers and industry over land have hit
construction and funding targets, hurting industrial growth.
(Editing by Rajesh Pandathil)