3i to stop investing in Indian infrastructure

In its annual financial report, 3i Infrastructure Chairman Peter Sedgwick explained that the company would re-balance its portfolio towards future investment activity in core infrastructure and public-private partnerships (PPP) in the UK and continental Europe.

The decision follows the departure of Anil Ahuja, managing partner and head of Asia for 3i, who quit the private equity firm in February this year.

3i Infrastructure had committed $250 million to the India fund for early-stage infrastructure investments, expected to deliver gross returns of around 20% through the fund's life. However, it suffered significant valuation volatility and brought "an element of volatility to the total return."

Of the commitment, $37.5 million remains but it is unlikely to be drawn as the fund reached the end of its investment period in November 2012 and will complete no new deals. As proceeds from existing investments are realised, 3i will not redeploy the proceeds in India. Non-yielding investments will be sold and proceeds re-deployed in core infrastructure and PPP projects.

3i Infra's Indian exposure represents about 10% of total assets.

The 3i India Infrastructure Fund portfolio includes power sector investments in Adani Power, Ind-Barath Utkal and GVK Energy; Supreme Roads, KMC Roads and Soma Enterprise for roads; and Krishnapatnam Port.

As of March 2013, the fund was valued at 0.8x cost in US dollar terms and 1x cost in rupee terms.

3i Infrastructure delivered a total return of 8.6% on shareholders' equity for the year ended March 2013. It had a portfolio of 14 assets valued at GBP919 million ($1.4 billion), and net assets of GBP1.1 billion.

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• Topics
• South Asia
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• India
• Infrastructure