3i Group has invested Rs 398 crore ($101 million, €69 million) in Hyderabad-based infrastructure company, Soma Enterprise.
The investment was made through 3i’s Infrastructure Fund, a $1 billion vehicle launched in August to target infrastructure projects in India.
The companies did not disclose the size of its stake in the company, but a Soma executive has called it a ‘minority stake in the mid-teens’ according to reports. If this is the case, it would value the company at Rs 3,400 crore, or around $863 million.
Soma is owned by the Hyderabad businessman Rajendra Prasad, whose family owns a majority stake in the company. The company focuses on real estate, urban infrastructure, irrigation, transportation, tunnel and hydro power. Among other projects, Soma is bidding for phase II of the Mumbai metro rail project.
3i’s infrastructure fund is the first fruit of the strategic partnership agreement announced by 3i and the India Infrastructure Finance Company last April. Its mandate is to invest primarily in power, ports, airports and road projects in early-stage and mature infrastructure operations. Soma is the second investment for the fund. In October 3i invested $227 million in a minority stake in Adani Power, a subsidiary of the Adani Group.
The Government of India now estimates that investment in infrastructure will need to increase from 3.5 percent of GDP at present to 8 percent of GDP in 2012 and anticipates around $320 billion in infrastructure investment over the next five years. 3i has an established presence in India, with a team of ten investment and advisory professionals based in Mumbai. The team has already invested a total of $325 million in India since 2005 in a range of sectors, including real estate, media and automotives and, in the infrastructure sector, power and ports.