3i chief executive Michael Queen said today the group will return to market later this year to raise a second India-focused infrastructure fund, targeting up to $1.5 billion. Its current $1.2 billion India infrastructure vehicle is 70 percent invested with one more investment to make before the group needs to raise another fund, Queen said.
Talk of a looming second fundraising began circulating towards the end of last year when, during a trip to India, Queen told local media that 3i was planning to have between $2 billion and $3 billion invested in Indian infrastructure over the following two years.
The call followed the announcement of 3i Group’s preliminary full-year results for the year to 31 March 2011.
The results showed the firm’s infrastructure business line generating a gross portfolio return of £45 million during the year, driven by an unrealised value gain of £29 million from 3i’s investments in its London-listed infrastructure vehicle and the first India fund and by portfolio income of £16 million.
The first India fund – 3i Infrastructure Fund – closed in 2008 with a target investment horizon of two to four years. On 31 March 2011, it was 65 percent invested and 70 percent committed. Since inception, the fund has generated a gross money multiple on invested cash of 1.3x.
During the year, the 3i India Infrastructure Fund made three investments totalling £36 million in: GVK Energy, which is developing a mainly gas-fired power portfolio; Ind-Barath Utkal, which is building a 700-megawatt coal-fired power plant in Orissa; and KMC Roads, the ‘build, operate and transfer’ (BOT) roads business of KMC Constructions, a Hyderabad-based infrastructure engineering and construction company.