Kotak Mahindra Bank, which recently raised Rs 490 crore for its infrastructure fund, will look to invest in unlisted infrastructure companies that are not highly leveraged.
“The focus of the fund is to invest in unlisted companies that do not have risky projects. While many infrastructure funds are already listed, there are also a few unlisted companies where exit is possible. We would like to invest in companies that would stay unlisted for a reasonable period of time,” said Suman Saha, head of the infrastructure advisory team at Kotak Investment Advisors.
While the fund is not constrained only to unlisted companies, it would be their focus. They can invest in standalone infrastructure projects as well as pre-IPO placements. The fund would prefer small hydro projects as well as roads.
Apart from already looking a few such deals, the fund is also talking to international investors who will put in more money into it. While it has achieved its first close with $90 million, the target is to raise $250 million. It hopes to raise this amount in 12-15 months.
Currently, the fund has large investors like Sumitomo Mitsui Banking Corporation (SMBC) of Japan and an affiliate of Brookfield Asset Management, Japan Bank for International Co-operation (JBIC) , and yet another unnamed insurance group. Kotak too invested in the fund. Kotak, SMBC and Brookfield have committed around Rs 275 crore. The fund is talking to other Japanese investors and the rest of the world as well.
The fund was created to invest in power generation or transmission infrastructure companies, roads, ports, airports, water treatment and supply, waste management and gas transmission and distribution in India. Kotak Mahindra (UK), Singapore branch is the investment manager of the fund.
After the infrastructure boom in 2007, pure infrastructure funds have come up between 2008-09. SBI Macquarie, UK-based private equity fund 3i, and Morgan Stanley's infra funds which were around $1 billion each.
Most of the infrastructure funds have almost exhausted their kitty. “While not many pure infrastructure funds are active in the market, nothing stops other PE firms from investing. We will have to compete with them,” says Saha.