3i to establish $1-billion India Infrastructure Fund

Europe''s biggest publicly traded buyout and venture capital firm, the UK-based 3i Group will set up a $1-billion infrastructure fund to invest in Indian power, ports, airports and road projects in early-stage and mature stages of infrastructure operations.

This fund is the first one being established by the 3i Group within the framework of its agreement with India Infrastructure Finance Company Limited, announced earlier April, this year.

3i says will invest at least $250 million in the unlisted fund subject to shareholder approval, while third party investors will be invited to contribute the rest.

Philip Yea, chief executive, 3i Group, said, "Today''s announcement is another very positive step in the development of our infrastructure business globally and also further accelerates our growth in Asia and India in particular."

The firm says it has 10 investment and advisory professionals in Mumbai to manage its investments in India and locate new investment opportunities. Since 2005 the UK private equity group has invested $325 million in India in real estate, media and other sectors.

The Indian government now estimates that investment in infrastructure will need to increase from 3.5 per cent of GDP at present to 8 per cent of GDP in 2012 and anticipates around $320 billion in infrastructure investment over the next five years to ease bottlenecks constraining economic growth, which in the last three year has averaged 8.6 per cent.

Michael Queen, infrastructure managing partner, said, "India offers tremendous growth opportunities for infrastructure investment. 3i, through its global network and within the framework of the strategic partnership with IIFCL, is optimally positioned to source attractive investment opportunities in the Indian infrastructure market and to deliver value to its shareholders and investors in the Fund."