State Bank of India (SBI) and Australia-based Macquarie Capital Group will jointly float a $2 billion private equity fund that will invest directly in infrastructure projects in India.
An MoU to this effect was signed by Deepak Chawla, deputy managing director of corporate strategy and new businesses at SBI in Mumbai and John Roberts, executive director, Macquarie in Sydney on Wednesday.
The documents were exchanged electronically through net. While both SBI and Macquarie will be hold a majority stake in the joint venture, International Finance Corporation (IFC) will have a minority stake in the proposed fund management company. Macquarie, SBI and the IFC together plan to contribute a total of $450 million in anchor investments to start the fund.
The JV will raise further capital from the domestic as well as from global institutional investors.
Chawla said there was no dearth of funds for such financing as SBI itself recently raised $4 billion through a rights issue.
However, the tie-up will bring in the expertise Macquarie has got from 116 funds it has across 25 countries. ”We expect the infrastructure spend of the country to reach $1 trillion in the next decade,” Chawla said.
The fund is scheduled to be launched by the end of the second quarter this year.
IDFC has already made its mark in the space.Nick van Gelder, head of Macquarie Capital Funds in Asia, said Macquarie and SBI had already identified a strong pipeline of investment opportunities which were under assessment. He did not divulge further details.
The fund intends to provide equity and equity-like capital for investments in traditional infrastructure, such as roads, ports, airports and power.
It will also look at investment opportunities in infrastructure-related assets and businesses.
”The Indian economy is expected to grow at 8-9% for the coming few years and, with the rapid development of a legal and regulatory framework that facilitates investment in infrastructure, we expect the infrastructure spend of the country to reach $1 trillion in the next decade,” Chawla said.
