In 2011, 11 infrastructure funds raised $5.4 billion from investors, a 40% drop from 2007, according to data from Venture Intelligence, a research service focused on private equity. In 2007, seven funds raised $8.8 billion
Japan-based Nomura Holdings Inc. has put on the backburner plans to raise $500 million for its Indian Infrastructure Fund, according to two officials familiar with the development.
The uncertain macroeconomic environment has triggered the decision, said the two officials, who spoke on condition of anonymity. The firm had planned to go on roadshows in October, but it is yet to start talks with potential investors, said one of the officials. “The plan has not been shelved completely. It is dependent on the market conditions,” said the second official.
Nomura had designated three senior people to operate the infrastructure fund, according to the second person cited above.
“There is a lack of historical performance and no great returns have been delivered. Therefore, the limited partners (investors in private equity funds ) are a lot more cautious at this stage,” said Abhay Pandey, managing director, Sequoia Capital India Advisors Ltd.
In 2011, 11 infrastructure funds raised $5.4 billion from investors, a 40% drop from 2007, according to data from Venture Intelligence, a research service focused on private equity. In 2007, seven funds raised $8.8 billion.
Infrastructure projects face regulatory hurdles apart from sector-specific issues, including sourcing of fuel such as coal and environmental clearances, PE funds say.
“Investors are genuinely disappointed with the political and regulatory environment surrounding the sector; in particular, the pace of policy reform required in the sector,” said Raja Parthasarathy, managing partner, IDFC Private Equity Co. Ltd.
Equity markets too are rerating infrastructure companies, making it difficult for them to go public, he said. “The infrastructure sector has lost 40-70% in value terms in the last 18 months,” said Parthasarathy.
Source: Livemint