3i Group Plc, Europe's biggest publicly traded buyout and venture capital firm, said it plans to raise $1 billion for a fund to invest in Indian roads, ports and other infrastructure.
The group said it will invest a minimum of $250 million in the fund and its unit 3i Infrastructure Ltd. agreed to commit the same amount. It will raise the remainder from third-party investors, the statement said.
India's gross domestic product has expanded at a record 8.6 percent average pace since 2003, faster than any of the world's top 20 economies except China. The government plans to build $320 billion of infrastructure projects to ease bottlenecks that are constraining growth.
The company has “identified India as a potentially attractive area of investment given the expected demand for capital to invest in infrastructure,'' Peter Sedgwick, chairman of 3i Infrastructure, said in the statement.
Inadequate levels of infrastructure investment are estimated to be holding back India's economic growth by as much as 2 percent a year, 3i's statement said.
Highways, which move almost 80 percent of the goods in India, account for only about 2 percent of the country's 3.32 million kilometers (2.1 million miles) of roads. It takes an average 85 hours to unload and reload a ship at India's major ports, 10 times longer than in Hong Kong or Singapore, according to government figures.
The company plans to raise $5 billion for a fund to invest in Indian ports, power plants and roads, two people with knowledge of the plan said in April. The initial target will be for a $1.5 billion fund, with the remainder to be raised within five years, the people said at the time.
Source: Bloomberg