Mumbai: An infrastructure fund run by State Bank of India and Macquarie group plan to raise $500 million in India to take the size of the fund to nearly $1.5 billion, two sources familiar with the deal said.

The fund has raised $887 million from foreign investors and aims to get commitments from Indian investors by September, the sources, who declined to be named, said.

State Bank has commited $150 million to the domestic leg of the fund raising, they said.

“Lead managers have started meeting investors to raise the 10-year funds,” one source said.

SBI capital markets, a unit of India’s top lender, has been mandated as the arranger, the sources said.

State Bank of India officials declined comment and officials at SBI Capital Markets could not be immediately reached.

India has said it needs $500 billion in the next five years to overhaul its infrastructure and the transport minister has said the country targets to spend $20 billion a year to build roads.

With an economy that grew at least 9% annually in the three years through March 2008, India is choking on overcrowded roads and railway lines with industries forced to self-generate power.

State Bank and Macquarie own 45% each of the fund. International Finance Corp, the private sector investment arm of the World Bank, owns the rest.

The fund eventually aims to reach $3 billion.

State Bank and Macquarie in a joint statement in April said the fund would focus on traditional infrastructure assets that generate long-term cash flows, such as transport infrastructure, telecoms, power and logistics projects.

IL&FS Investment Managers and Standard Chartered this year raised $600 million for an Asia infrastructure fund.

UK’s 3i group has raised $1.2 billion and IDFC has collected $700 million in the past two years for India infra funds.