IDFC Project Equity to launch second infrastructure fund
IDFC Project Equity, a subsidiary of Infrastructure Development Finance Company (IDFC), will launch its second India infrastructure fund later this year.
"We are entering into a fundraising later this year and it will be our second India-focused infrastructure fund," M.K. Sinha, IDFC Project Equity's CEO, told AVCJ. "The first fund is almost $1 billion in size and the second vehicle will be of similar scale."
India Infrastructure Fund (IIF), which was closed in 2009 and is currently worth INR38 billion ($927 million), bets on long-term equity investments in a diversified portfolio of infrastructure projects in India. Its target sectors include transport, energy and utilities, telecommunications and urban infrastructure.
The fund also focuses on assets that have visibility of strong cash flow, low volatility of returns and potential for capital growth.
IIF is sponsored by its parent company, alongside Citigroup and India Infrastructure Finance Company Limited (IIFCL). Institutional investors from India, USA, Canada, Europe, Japan and the Middle-East also participated.
In February, IDFC Project Equity made its first investment in India's hospital market, committing around $37 million to Pune-based specialty hospital chain Sahyadri Hospitals. The investment firm has put in $20 million to buy the entire stake held by ICICI Ventures and invested another $16-17 million for primary transaction.
The firm's other investments include Ashoka Highways, JAS Toll Road, Essar Power and Sabarmati Gas.
"While we still have some dry powder in our first fund, it is likely to be fully invested by the later part of this year," Sinha added.
India's infrastructure sector has been a major source of investment opportunities among international private equity players in recent years. In 2007, 3i Group held the final close on $1.2 billion for its 3i India Infrastructure Fund and has been looking to raise at least the same amount for its successor following the strong performance.
Last October, Macquarie Group and State Bank of India (SBI) also set a $1-1.5 billion target for their second India-focused infrastructure fund, while SREI Infrastructure Finance is reportedly seeking $1 billion to invest in areas such as roads, power and ports. However, in January, Nomura postponed the launch of its $500 million India-focused infrastructure fund due to the uncertain economic environment.
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