Macquarie, SBI target second India infrastructure fund
Macquarie Group and State Bank of India (SBI) are targeting $1-1.5 billion for their second India-focused infrastructure fund. Plans for the new vehicle come as the first fund, SBI Macquarie Infrastructure Trust, which closed in March at $1.2 billion, has only $500 million left in dry powder and more deals in the pipeline.
Macquarie and SBI want to be ready for launch in the next two months, but the deteriorating global economic environment may force a postponement until the first quarter of 2012, Reuters reported, citing sources with direct knowledge of the matter.
Losses from poor infrastructure are believed to amount to one to two percentage points of India's GDP and the government estimates that the sector requires $1 trillion in investment for the five years beginning April 2012. Private equity investment in infrastructure reached $4 billion last year, up four-fold from 2006, according to Bain & Company. Activity is tipped to grow 25-50% annually over the next three years.
Nomura, SREI Infrastructure Finance and 3i are among those said to be raising India-focused infrastructure funds while in late June the government finalized the broad structure for an $11 billion infrastructure debt fund. The fund's responsibilities would include plowing much needed capital into the power sector by supporting the construction of power-generation facilities as well as helping existing energy companies boost capacity.
The Blackstone Group has made power generation assets a particular target. In July, it closed its third power sector deal in 15 months, reportedly agreed to pay INR5 billion ($111 million) for a 25.2% stake in Visa Power. Its previous investments in the sector were Monnet Power and Moser Baer Projects Private.
In June, Macquarie and China Everbright have made the first close on their joint China infrastructure fund, securing total commitments of $479 million.
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