New India deals off 3i Infrastructure’s agenda

The London-listed infrastructure investment business will focus its efforts on Europe from now on as its India portfolio continues to disappoint.

In its yearly results statement to the end of March, 3i Infrastructure confirmed that it had suspended new fundraising in India and will not make new investments in the country.

The firm’s only India-focused infrastructure fund, which closed on $1.2 billion in 2008, reached the end of its investment period in November last year. A statement said that 3i Infrastructure’s remaining commitment to the India fund “will remain largely undrawn”.

It added that the “the team’s focus will be on preparing the India fund’s investments for sale in a challenging market”.

Although the firm acknowledged that “the fundamental case for infrastructure development (and private involvement in this) remains unaltered”, India’s challenges include falling deal volumes, lower GDP growth rates, a growing fiscal deficit, currency volatility and high inflation and interest rates.

The value of 3i’s investment in the India fund declined from £114.2 million (€135.3 million; $175.9 million) at the end of March 2012 to £99.1 million at the end of March last year. Adani Power, a portfolio company, saw a 40 percent decline in its share price over the year. Soma Enterprise, a developer and another portfolio company, experienced “challenges in project execution and constraints on working capital”.

Overall, 3i Infrastructure hailed a “successful year” thanks to its European portfolio, which performed “in line with or above expectations”. The business delivered a total return of £89.1 million (or 8.6 percent on shareholder equity) compared with £56.0 million (5.6 percent) in 2012.

During the period, 3i Infrastructure received gross proceeds of £21.2 million from its sale of Alpha Schools to a subsidiary of fellow London-listed fund manager HICL. It also received £6.9 million as a result of loan repayments from train rolling stock operator Eversholt and Elgin, an owner of UK Private Finance Initiative assets.