ADB plans equity fund for infrastructure financing in India
Wednesday, 11 February 2004, 20:30 IST
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NEW DELHI: Asian Development Bank (ADB) and AMP Capital Investors, the funds management arm of the Australian financial services group AMP, plan to launch a private equity fund to promote infrastructure financing in India. The fund aims to help the private sector in India meet its infrastructure financing needs, raise the efficiency of infrastructure projects, and mobilise long-term capital from domestic and international institutional investors, ADB said in a statement Tuesday. The equity fund would be available for projects in power, transport (toll roads, railways, ports, and airports), telecommunications (wire-line and wireless networks), and urban facilities (water and sewage networks). "The fund is expected to raise $100 million, with a cap of $125 million, from institutional investors. ADB and AMP Capital will seed the fund with $15 million and $30 million investments, respectively," ADB said. The Infrastructure Fund of India Limited Liability Company (TIFOI) will invest in non-listed securities of companies that develop, own or operate infrastructure facilities and projects in India. TIFOI may also consider investments in listed equity securities of such entities. "We are pleased to see the formal launching of the Infrastructure Fund of India. The fund is an example of ADB's commitment to help finance commercially viable private sector infrastructure projects," said Louis de Jonghe, country director of ADB's India Resident Mission. The multilateral agency said the proposed assistance to TIFOI under ADB's private sector window should serve to complement the ongoing and planned public sector initiatives, especially the loans to Indian development finance institutions (DFIs). "We are delighted to be partnering with ADB on this significant investment initiative," said Merv Peacock, AMP Capital Investors' chief investment officer. With over A$70 billion under management, AMP is one of the largest financial organisations in Australia and New Zealand. "AMP Capital brings previous experience in Indian infrastructure investment to this partnership, having launched a similar fund in November 1999. This fund has generated an internal rate of return of 37 percent since inception, and recently completed its first partial exit through the floating of Indraprastha Gas Limited," said Peacock. Incorporated as a limited liability company, TIFOI will have a seven-year life from the first financial closing, with an option for two-year extensions. By the end of TIFOI's life, all investments are expected to be liquidated and the investors will be provided with the realised return.
Source: IANS
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