Old Lane Partners LP, a New York-based investment fund with a strong India presence, could increase its investment plans for India after it was acquired by Citigroup Inc, says its new chief executive.
Old Lane is considering ideas for new investment vehicles for emerging markets, including India, Guru Ramakrishnan, Old Lane’s newly-appointed chief executive and president, told Mint in a phone interview from New York.
Old Lane, which manages assets worth $4.5 billion (Rs18,900 crore), was formed in March 2006 by three former Morgan Stanley executives—Vikram Pandit, John Havens and Ramakrishnan. Citigroup announced it had bought Old Lane, which has two India funds, in a deal said to be worth about $800 million. Pandit will head Citigroup’s alternative investment group, which includes hedge funds, private equity and real- estate funds.
Old Lane finalised a $500 million India fund in November 2006. It will invest in Indian real estate and infrastructure. Ramakrishna said 20% of this has already been committed and several other possible deals will come up before the investment committee soon.
Around 20% of all private equity deals have been in the real estate and infrastructure management space, up to February 2007, up from 12.4%, in 2006, according to data released by Grant Thornton, a professional services company. India Infrastructure Finance Co and 3i, a British private equity firm, also announced an infrastructure fund, last week.
“There is a sense that infrastructure development will be a key driver for growth so we will see more money coming in to these sectors,” said Harish HV, a partner for corporate finance at Grant Thornton. “But only the brave will go in those areas where policy is not clear yet.”
Old Lane is looking at possibly investing in two special economic zones (SEZ) and two power projects, through its infrastructure fund. “We look at SEZs as combination of infrastructure, real estate and corporate investment. So, returns will also be blended,” Ramakrishnan said.
The government’s partial backtracking on its SEZ policy, based on intense opposition, does not make investing in them less attractive, Ramakrishnan said.
“This is part of process of working in emerging markets where governments need to balance growth and growth objectives. Some retracing of policy is natural. But we look at the entire cycle for our investments.”