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NEW DELHI, INDIA (10 February 2004) - ADB and AMP Capital Investors, the funds management arm of the Australian financial services group, AMP, yesterday announced the launch of a private equity fund to promote infrastructure development in India.
The Fund is expected to raise $100 million, with a cap of $125 million, from institutional investors. ADB and AMP Capital will seed the fund with $15 million and $30 million investments, respectively.
The Infrastructure Fund of India Limited Liability Company (TIFOI) will invest in non-listed securities of companies that develop, own or operate infrastructure facilities and projects in India. TIFOI may also consider investments in listed equity securities of such entities.
The ADB investment will help the private sector in India meet its infrastructure financing needs, raise the efficiency of infrastructure projects, and mobilize long-term capital from domestic and international institutional investors.
"We are pleased to see the formal launching of the Infrastructure Fund of India. The Fund is an example of ADB's commitment to help finance commercially viable private sector infrastructure projects," said Louis de Jonghe, Country Director, India Resident Mission. ADB's participation will be critical in helping introduce best environmental and corporate governance practices.
ADB has consistently assigned high importance to India's infrastructure sector reforms and has provided a number of facilities aimed at helping the development of the infrastructure sector. The proposed assistance to TIFOI under ADB's private sector window should serve to complement the ongoing and planned public sector initiatives, especially the loans to Indian development finance institutions (DFIs). Infrastructure sectors that are eligible to avail of this Fund include power, transport (toll roads, railways, ports, and airports), telecommunications (wire-line and wireless networks), and urban facilities (water and sewage networks).
AMP is one of the largest financial organizations in Australia and New Zealand. With over A$70 billion under management, AMP's core businesses include retirement savings and income; investments; financial planning; insurance and banking. AMP Capital Investors' Chief Investment Officer, Merv Peacock, said: "We are delighted to be partnering with ADB on this significant investment initiative".
"AMP Capital brings previous experience in Indian infrastructure investment to this partnership, having launched a similar fund in November 1999. This fund has generated an internal rate of return of 37% since inception, and recently completed its first partial exit through the float of Indraprastha Gas Limited. We look forward to building on this experience with TIFOI and creating compelling investment opportunities in partnership with ADB."
Incorporated as a limited liability company, TIFOI will have a 7-year life from the first financial closing, with an option for two-year extensions. By the end of TIFOI's life, all investments are expected to be liquidated and the investors will be provided with the realized return.