3i targets $1bn for debut Indian infrastructure fund

Europe’s largest quoted private equity company 3i is investing alongside its listed infrastructure vehicle in a debut Indian infrastructure fund. Together they will account for half the fund’s capital. Third-party investors will fund the remaining $500m.

3i Group has launched a $1 billion (€740 million) fund to invest in the rapidly growing Indian infrastructure market.

The 3i India Infrastructure Fund will apply the investment strategy of 3i’s global infrastructure business. The fund is the first fruit of the strategic partnership agreement announced by 3i and the India Infrastructure Finance Company last April.

The fund will build a balanced portfolio of infrastructure investments in India, has a target size of $1 billion and will be unlisted.

It will invest primarily in power, ports, airports and road projects in early-stage and mature infrastructure operations.

3i intends to invest a minimum of $250 million in the Fund. 3i Infrastructure, its quoted vehicle, which is exclusively advised by 3i Investments, a subsidiary of 3i, proposes to invest $250 million in the fund, subject to the approval of its shareholders.

Other commitments will be sought from third-party investors in order to achieve the fund’s target.

India is among the fastest growing economies in the world. 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 experienced 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.