3i has raised $1.2 billion (€755 million) for its India infrastructure fund, exceeding its $1 billion target by 20 percent.
The fund is managed by 3i’s infrastructure team which has offices in the country in Mumbai and Delhi. It attracted investments from 16 limited partners from ten countries across Europe, North America, Asia and the Middle East.
3i Infrastructure, the FTSE 250-quoted infrastructure affiliate of 3i, and the FTSE 100 company itself are the largest investors, each committing $250 million.
3i Infrastructure was supposed to be the sole vehicle for all of 3i’s global infrastructure investments, but in 2007, 3i partnered with the India Infrastructure Finance Corporation, a government infrastructure finance provider.
Michael Queen, a managing partner at 3i, and head of its Infrastructure business, said: “[3i had] entered into a relationship with the Indian Government and realised that the opportunity was so large that we needed a country-focussed vehicle.”
Queen said the fund will build projects with a value of up to $5 billion. It expects to make 10 investments overall.
The agreement is one of the first between the Indian Government and a third-party investor to foment $450 billion of infrastructure investment that the country requires by 2012. Other funds are also being raised. Macquarie, the Australian bank, and State Bank of India, the Indian bank, launched a $2 billion fundraising today, according to media reports.
Queen said that it will be a challenge for the Indian government to stimulate the approximate $150 billion of equity investment it will need to meet its 2012 target.
“But if you look at the stream of projects on power, ports, airports and roads there is a lot of activity. I’ve been extremely impressed by the sheer foresight the Indian government has shown [in stimulating private investment]”.
The fund has already made a $227 million investment in Adani Power, which is developing power plants across India, as well as a $101 million investment in Soma Enterprise, which undertakes various projects in areas such as hydroelectric power, water resources and transportation.