SBI, Macquarie start infra fund, hope to raise $2-3bn

State Bank of India (SBI) and the Macquarie group today announced the launch of the Macquarie-SBI Infrastructure Fund (MSIF).

Global investors have committed $887 million to the fund alongwith a direct co-investment commitment of$150 million by SBI, bringing total capital raised to $1.037 billion.

Further SBI, Macquarie and IFC have committed $150 million each to bring a total of $450 million of sponsor commitments, MSIF said in a statement.

Capital raising would continue during 2009, and together with Indian domestic institutions, the total capital is anticipated to be between $2 billion and $3 billion.

Foreign institutions will invest through MSIF and Indian domestic institutions will invest through a domestic entity called the SBI-Macquarie Infrastructure Trust (SMIT). MSIF and SMIT will invest together into infrastructure projects in India.

MSIF is managed by the SBI and Macquarie joint venture, with the International Finance Corporation (IFC), the private sector lending arm of the World Bank, as a minority shareholder and cornerstone investor in MSIF. SMIT will also be managed by the joint venture.

“Investments will be made in traditional infrastructure assets that generate long term identifiable cash flows, and that exhibit essential service characteristics.

These include roads, sea ports, airports, power generation, transmission and distribution, gas distribution, telecommunications and logistics businesses. Investments will include green-field projects as well as established operating businesses,” the statement said.

An investment pipeline has been identified and is under assessment. The sponsors anticipate further investment opportunities over the next two to three years, which corresponds with the investment period of MSIF, it added.