Aig Marks 30% Of Infrastructure Fund For Indian Equity

US insurance giant American International Group (AIG) has earmarked about 30 per cent of its recently-closed $2 billion (Rs 7,200 crore) Asian Infrastructure Fund-II (AIF-II) for equity investments in India.

The allocation from AIF-II, the second in a series of Asia-specific funds from AIG, is expected to be around $600-700 million (Rs 2,160-Rs 2,520 crore).

The AIF-II allocation leads two other new equity funds designated for investments in India. Hongkong & Shanghai Bank Corporation (HSBC) is reportedly floating an equity fund of between $50 million (Rs 180 crore) and $100 million (Rs 360 crore).

HSBC already has a $50 million fund in the country. Alliance-DLJ has recently closed (or completely subscribed) a $100 million fund. Both the funds are expected to have significant exposure in infrastructure projects.

 

Besides the AIF-II, the $148 billion (Rs 5,32,800 crore) AIG has also earmarked 30-35 per cent of an infrastructure bond fund for investments in India, finance sources said. The allocation from this fund, which plans to target the debt requirements of domestic infrastructure projects, is also estimated in the range of $600-700 million.

The AIF-II allocation, the HSBC and Alliance funds are part of a growing tribe of infrastructure equity investors in the country. A $100 million fund jointly promoted by Mumbai-based Infra- structure Leasing & Financial Services, AIG and multilateral investors like the Asian Development Bank closed late last year.

A $100 million media and telecom specialist fund promoted by ING Barings Bank is also examining projects closely. The Anglo-Dutch banking major expects to generate 30 per cent business for the fund named Barings Communication Equity Asia from India. A US fund, the $30 million International Equity Partners has also been appraising infrastructure projects for possible investments.

The sudden activity in the infrastructure funds industry marks the interest shown by overseas investors in domestic projects, sources said. Telecom is the most obvious sector now that most contentious regulatory issues have been resolved. Other sectors like roads, ports and small power plants are driving investor interest, the director of an infrastructure finance company said.

Two funds AIG Indian sectoral equity fund and the Peregrine-led Asian Infrastruc-ture Fund have been active in infrastructure investments in the last one year. The AIG fund has invested in a host of projects spanning telecom, consumer chemicals and general industry.