Enam group, a closely held financial boutique in Mumbai, is raising a $750 million ('3,473 crore) infrastructure fund–its first private equity (PE) fund–to invest in the power, port, road and airport sectors, said a person familiar with the development.
The fund will target infrastructure assets for 75% of its investments and allied sectors for the balance 25%. It will equally invest in new and existing infrastructure projects.
“The fund has been recently launched and there is a lot of interest in it,” said the person, who asked not to be identified.
Akash Bhansali, director, Enam Holdings Pvt. Ltd, the group's investment management arm, declined to comment on the fund.
The PE fund's team comprises Arun Srivastava, former managing director and chief executive of Essar Power Ltd; Parvez Umrigar, former managing director and chief executive officer of Gammon Infrastructure Projects Ltd and Ajay Munot, former executive director of Kalpataru Power Group.
According to Venture Intelligence, a research service focused on PE and mergers and acquisitions, 49 PE funds invested $3.1 billion in India's infrastructure sector this year. Since 2004, 464 deals worth $17.9 billion have been made in the infrastructure space.
The government has often stressed on the need for private-sector investments in infrastructure creation and has laid down a road map for planned investments of a little more than $1 trillion in the next Five-year Plan (2012-17).
The estimate is nearly twice the amount projected to be spent on infrastructure in the ongoing Plan period (2007-12), which calls for investments of at least '20 trillion in infrastructure, 36% of which has to be mobilized from private firms.
While PE activity has picked up in India, domestic firms still find it tough to raise money from investors–typically hedge funds, education funds and very rich individuals–abroad, where several economies continue to be shaky.
In India, few large investors are comfortable with PEs as an asset class.
As on 31 March, the total outstanding of domestic and foreign venture fund investments stood at '37,578 crore, data from capital market regulator Securities and Exchange Board of India show.
Infrastructure firms rely on banks for much of their project finance needs.
The availability of project finance has been a preoccupation for the government, looking to shore up a huge infrastructure deficit.
The funding ability of Indian institutions is restricted by central bank limits on how much they can lend to each sector or business group.
A case in point is the country's power sector. India has a power generation capacity of 163,000MW and plans to add 78,577MW by 2012, investing '10.31 trillion.
According to the power ministry, the government faces a '4.51 trillion funding shortage in this effort, but it expects to make up for this by attracting private investors to participate in the power sector.
Divya Guha and Deepti Chaudhary contributed to this story.
Source: istockanalyst