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Hinduja to launch $500-mn infra fund

More PE firms sense climate congenial to start such ventures in India

Reghu Balakrishnan  |  Mumbai 

More corporate houses are joining the private equity fundraising bandwagon to tap growing potential in the country’s private equity investments. Following the Tatas, Birlas and Ambanis, it is now the turn of the Hindujas to enter the PE fundraising mode.

Contrary to the other corporate groups that have launched general sector-agnostic funds, the Hindujas plan to focus only on investments in infrastructure projects. The diversified group has plans to launch a $500-million (Rs 2500 crore) India-focused infrastructure fund by this year.

In fact, the immense potential for investments in infrastructure in India is compelling more PE firms to set up infra-focused funds in India. According to data from VCCedge, nine infra-focused funds were launched between 2009 -2012; they raised about Rs 7800 crore during the period.

According to a study from Bain & Co, PE funds have invested approximately $13 billion, equivalent to one-fourth of the total capital flows to India, into the infrastructure sector over the last five years. Since 2006, annual PE investment in infrastructure has grown fourfold -- from about $1 billion to $4 billion in 2010, when it rebounded to the 2007 levels.

Ashok Hinduja, chairman of Hinduja Group India, said his firm was in the process of setting up a team for the PE business. “Once the right team is in place, we will start fundraising,” he added. According to himthe , group itself would invest about 25 per cent of the fund. He refused to disclose further details.

Like typical infra funds, the Hindujas also eye investments across the areas including roads, ports and power sectors.

Aditya Birla Group owns a PE arm —Aditya Birla Private Equity, which has raised Rs 880 crore for Fund I. Anil Ambani’s Reliance Capital owns two PE arms: Reliance Equity Advisors (a PE fund with a corpus of Rs 1,200 crore) and Reliance Venture Asset management (a VC fund). The Mukesh Ambani-owned RIL had tied up with US-based hedge fund DE Shaw to enter financial services space with plans including launching a sector-agnostic India-focused PE fund.

Tata Capital’s various PE/VC funds include Tata Opportunities Fund, Healthcare Fund, Innovation Fund and Growth Fund.

According to Bain & Co report, the range of sub-sectors (of infrastructure) attracting PE interest is also broadening and evolving. “In 2006, PE interest was largely concentrated in the engineering and construction space,” it said. “The power sector has attracted about 45 per cent of total PE infrastructure investment between 2008 and 2010.” As for the telecom infrastructure, it has attracted $1.9-billion worth investments over the same period.

“Opportunities in road construction are drawing investor interest due to changes by the National Highways Authority of India in model concession agreements that have speeded up the awards process,” it added.

First Published: Wed, April 18 2012. 01:04 IST