L&T Infra Finance targets $1bn for PE fund(3)

The Mumbai-based firm is looking to tap international investors after sealing a first close on around $82m from domestic LPs.

L&T Infrastructure Finance (L&T), the infrastructure finance arm of Indian engineering giant Larsen & Toubro, is looking to raise a private equity fund of about $1 billion to invest in infrastructure projects.

The fund has already reached a first closing on INR5 billion (€61 million; $82 million) from domestic investors, a spokesperson for L&T told Infrastructure Investor. The firm now aims to tap growing investor interest in the Indian market by seeking commitments from overseas institutions.

“We are currently assessing the interest of international investors given the change in their outlook towards India and will begin the formal process after completing the first level assessment,” the spokesperson said in an email.

Reports in the local press said the firm had already approached a number of foreign pension funds, sovereign wealth funds and family offices and that the fund would target investments in power, roads, ports and other projects.

The fund, launched last year, initially struggled to get off the ground amid policy uncertainty in the build-up to last May’s general elections. But the victory of Narendra Modi ushered hopes of fresh reforms to boost the Indian economy, bringing prospects of sustained efforts to upgrade the country’s creaking infrastructure in a more investor-friendly climate.

A week ago, Infrastructure Investor reported that Piramal Enterprises, one of India’s largest diversified companies, and APG Asset Management, the Dutch pension fund asset manager, had launched a strategic alliance to invest in rupee-denominated mezzanine instruments issued by infrastructure companies in India. The pair has a target investment of $1 billion over the next three years.

Other institutions have been betting on the emergence of India’s infrastructure markets amid the optimism brought by the new government. Last June, the Canada Pension Plan Investment Board (CPPIB) closed its first deal in the country by investing INR20 billion in L&T Infrastructure Development Projects, another subsidiary of Larsen & Toubro.

A clutch of fund managers, including IDFC Alternatives, ICICI Venture and IL&FS, are also raising India-dedicated funds or have recently done so. ICICI Venture, the investment arm of Mumbai-based ICICI Bank, had raised $270 million towards its $500 million target as at November 2013.