India Infrastructure Fund II (IIF2) has raised close to $900 million as fund commitments from IDFC itself and offshore investors. The fund has an option to get an additional $900 million as co-investments from its limited partners (LPs) which wont be directly managed by IDFC, said a source.
This way the combined capital commitment of $1.8 billion would be the biggest funding towards infrastructure segment by an India-focussed private equity player in the last four years.
Contacted, an IDFC spokesperson declined to comment on the specifics. We can only say that we are targeting R5,500 crore with a large co-invest pool which can be as big as the fund itself. This added co-invest pool will be added funding available for the infrastructure sector through us, said Satish Mandhana, managing partner and CIO at IDFC Alternatives. According to the latest analyst presentation by IDFC on July 29, it had AUM of R4,680 crore or nearly $0.8 billion under India Infrastructure Fund II (IIF2) as against the targetted R5,500 crore.
However, the fund has not yet started depolying the capital. We have few deals in the pipeline. We will announce them as and when we consummate them, Mandhana said. IDFC had commenced fund raising for IIF2 in January 2013 with a target of raising raise $1 billion, and had announced the first closure at $644 million in September 2013. The investors in IIF2 comprise global institutional investors from North America, Europe and the UK with CDC group of UK being one of the largest investor having committed $200 million to the fund.
IIF2 is a part of IDFC Project Equity Fund and is the successor to IDFCs first infrastructure fund which closed in June 2009 with a fund size of $927 million.
The recent surge in sentiments towards India has led to revival in fund-raising environment and there are a host of PE players looking to raise infrastructure and real-estate funds. L&T Infrastructure Finance that had raised nearly R500 crore till November 2013 from domestic investors is reportedly looking to raise $1 billion for infrastructure-focussed fund.
Raja Lahiri, a partner at Grant Thornton India, said though overall fund raising continued to be a challenge, there might be an uptick in fund raising by both global and domestic fund mangers in coming year. Given the improving business sentiments in India, in my view, PE fund raising now is definitely placed to tap both domestic and overseas investors. Further, there have been some successful exits as well as increased appetite to do buy-out deals, which augurs well for higher global PE fund allocations towards India going forward, said Lahiri.