3i Group has held a final close on its India-focused infrastructure fund at $1.2 billion (€753 million), 20 percent above its initial target.
The 3i India Infrastructure Fund was launched in August of 2007 targeting $1 billion, aiming to build a balanced portfolio of infrastructure investments in India investing primarily in power, ports, airports and road projects in early-stage and mature infrastructure operations.
The fund has obtained commitments from 16 limited partners from ten countries across Europe, North America, Asia and the Middle East. As the fund had planned, 3i and its subsidiary 3i Infrastructure and have each committed $250 million to the Fund.
The vehicle is targeting around ten investments over its lifetime, and its portfolio already includes a $227 million investment in Adani Power, which is developing a portfolio of power plants across India, as well as a US$101 million investment in Soma Enterprise, an infrastructure developer focussing on build-operate-transfer (BOT) projects.
In 2007, 3i formed a strategic partnership with the Indian Government-owned India Infrastructure Finance Corporation Limited (IIFCL) to cooperate on financing infrastructure projects in India. This was one of the first such agreements between the Indian Government and a third-party investor.
“The closure of this Fund significantly above target represents a major milestone for us and will enable projects with a capital value of up to $5 billion to be completed,” said Michael Queen, Managing Partner and head of 3i’s Infrastructure business.
The government of India estimates that investment in infrastructure will need to increase from 3.5 percent of GDP at present to 8 percent of GDP by 2012, and anticipates that around $450 billion of infrastructure investment will be required in India by 2012. 3i’s vehicle is one among many infrastructure funds that have been launched in India over the past two years. Several funds have already been set up to exclusively target the sector in India. In March, Mumbai-based investment firm Quantum Equity Advisors launched a $500 million infrastructure fund. In February, Kotak Investment Advisors launched a $1 billion fund for Indian infrastructure. And in February of last year The Blackstone Group teamed up with Citigroup and India’s Infrastructure Development Finance Company to form a $5 billion Indian infrastructure fund.