GIP eyes up to $1 billion corpus for infra fund

The fund will aim to acquire operating assets in roads, renewables and transmission. GIP will explore investment opportunities in infrastructure projects for 5G roll out


GIP a New York-based infrastructure fund manager has initiated talks to raise a India-focused infrastructure fund with a targeted corpus of as much as $1 billion, said two people aware of the development.

Global Infrastructure Partners (GIP) entered India last year after acquiring the infrastructure investment platform of IDFC Alternatives. Prior to the acquisition, IDFC Alternatives had raised two infrastructure funds—India Infrastructure Fund and India Infrastructure Fund II—aggregating $1.8 billion.

GIP has initiated a soft launch of the fund and has started speaking with a few limited partners (LPs, investors in a private equity fund). They are aiming to raise around $1 billion. The fund will largely focus on acquiring operating assets in areas such as roads, renewables and transmission but could also look to invest in other infrastructure assets.

Last December, a senior GIP India executive said besides buyout deals, the group will also look to assist global infrastructure developers and operators willing to set up shop in India to de-risk their equity exposure. GIP will also explore investment opportunities in infrastructure projects such as airports, fibre optic networks and data centres for 5G roll out, the executive said.

A formal fund-raising process will start once the firm completes the ongoing sale of IDFC’s roads platform Highway Concessions One, among significant assets currently owned by the India funds, the person cited above added.

On 13 August the Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ) was in exclusive talks with GIP to acquire the roads totaling 470 route km.

The HC1 portfolio, comprising seven road assets—five toll roads and two annuity roads—is spread across seven states and generates a consolidated revenue of Rs 620 crores. The construction of roads was funded by IDFC Alternatives’ second infrastructure fund.

GIP’s India dedicated infra fund will add to the large amount of foreign investments that has been flowing into India’s infrastructure sector from long-term investors such as pension funds, sovereign funds and insurance companies.

In November a private equity major KKR was in the process of raising its first Asia-focused infrastructure fund, targeting a corpus of $1.5-2 billion. A significant portion of the fund is expected to be deployed in India. The PE firm hired Hardik Shah from Brookfield Asset Management in October to lead its infrastructure investments business in India. Homegrown financial services group Edelweiss’ alternative investments arm is another asset manager in the market to raise an infrastructure fund. Edelweiss marked the first close of its Edelweiss Infrastructure Yield Plus Fund in May, raising around Rs 2,000 crores.  Edelweiss is looking to raise other Rs 4,000-4,500 crores for its infrastructure fund Edelweiss Infrastructure Yield Plus Fund.

Apart from the roads portfolio on sale, GIP’s India portfolio comprises renewable energy power plants under its Vector Green Energy platform and investments in thermal power plants.

Last year, IDFC Alternatives also sold its private equity real estate investments business to Bahrain-based asset manager Investcorp.

Source: Live Mint