The Indian economy has been amongst the fastest growing economies in the world. However, one critical prerequisite for momentum in the growth to continue is a program of sustained accelerated development of infrastructure. The need for stepping up the scale and scope of private investment in infrastructure has been emphasized by the Government of India at all levels. In line with this, the Government has been opening up subsectors of infrastructure for private sector investment.
While an aggregate amount of over USD 400 billion has been invested in Indian infrastructure over the past 7 years, the private sector share is estimated at about USD 100 billion (increasing from 18% of total infrastructure spend in 2003 to 34% of the total infrastructure spend in 2009). Over the next five years, the magnitude of investments required in the Indian infrastructure sector is estimated at USD 600 billion, of which the private sector share is expected to gradually increase further to about 50%.
While the investment demand exists, the requisite enabling factors such as improving user ability and willingness to pay, conducive policy and regulatory environment, acceptable framework for Public Private Partnerships (PPPs) and a robust domestic banking system which has so far been financing a significant component of debt requirement of infrastructure projects are also in place. In addition, some key private sector infrastructure developers have already demonstrated strong risk mitigation / execution capabilities in successfully executing and profitably operating a number of challenging projects across various infrastructure sub-sectors. This has created significant value for investors and shareholders. The sizeable opportunity set coupled with the capabilities of both established developers and emerging entrepreneurs have created a positive environment for infrastructure investing in India.
Consequently, ICICI Venture has launched its new Infrastructure focused Private Equity fund, called Indian Infrastructure Advantage Fund.
The Fund proposes to invest in various infrastructure sub-sectors including power, roads, ports, airports, railways, telecom and urban & social infrastructure. The Fund's investment would be either directly into projects or in holding companies associated with infrastructure assets with a preference to invest by way of structured minority stakes. The Fund will target high quality investments with strong fundamentals and attractive risk-return profiles.
In the infrastructure financing space in India, ICICI Bank has maintained a leading position over the years with an estimated market share of about 27% in terms of deal value in infrastructure lending in India during the period 2007-09. ICICI Bank has also been directly associated in several policy initiatives undertaken by the Government of India and other public bodies in infrastructure domain.
ICICI Venture's Infrastructure team comprises senior professionals with extensive experience of financing, investing and advising in the Indian infrastructure space for over a decade. Many of the senior members have worked with the infrastructure business of ICICI Bank and are now dedicated to managing / advising the Fund. The team has collectively closed more than 150 transactions amounting to over USD 37 billion and advised on over 20 infrastructure transactions amounting to about USD 7 billion. In addition to financing, investing and providing transaction advisory, the team members have also worked with various governments and government bodies, multi lateral agencies, regulatory agencies, policy forming bodies, etc. on several infrastructure policy initiatives undertaken in the areas of power, airports, telecom, roads etc.
For any further information about Indian Infrastructure Advantage Fund, please contact