Mumbai: 3i Group Plc., the London-headquartered private equity (PE) investor, made the first investment from its Indian infrastructure fund on Thursday by shelling out $227 million (Rs897 crore) for an undisclosed stake in Ahmedabad-based Adani Power Ltd, a fully-owned subsidiary of Adani Enterprises Ltd.
This is the firm’s largest transaction in India since it started investing here in mid-2005. The $1 billion India-dedicated infrastructure fund was announced last April in partnership with the government-backed India Infrastructure Finance Co. Ltd (IIFCL).
The infrastructure fund completed its first tranche of fund-raising with $500 million raised from 3i’s proprietary funds. The balance $500 million will be raised from overseas third-party investors. IIFCL will participate in debt-funding projects identified for investment by the infrastructure fund.
“This is our largest investment in India till date. We have done a total of 12 deals since launch. We are in a closed period so we can’t give you exact numbers on how much we have invested,” said Anil Ahuja, managing director and co-head, Asia.
Adani Power will use the funds to develop an independent 2,640MW imported coal-based thermal power plant in Gujarat. The project, launched in June 2006, is expected to be operational by 2009 and achieve full capacity by the close of 2010, a company release said.
Overall, 3i has already invested well over $500 million in India across 12 firms, excluding Adani Power, since it entered this market in April 2005. Most of its deals have been minority stake, growth investments; such growth investments along with infrastructure will anchor the company’s investment strategy in India for the next couple of years.
Deals sizes, excluding Adani, have averaged at $50-100 million, and 3i typically stays invested for three-seven years.
Some of its recent growth deals include Welspun Gujarat Stahl Rohren Ltd, Out of Home Media (India) Pvt. Ltd, Navayuga Engineering Co. Ltd and Gujarat Adani Port Ltd.
However, in the longer term, it also has leveraged buyouts and early-stage venture investments on its radar and may also set up separate, India or pan-Asia funds to cater to such investments. Asia accounted for 9% of 3i’s total assets under management for the fiscal year ended March and in three-four years it expects this to grow to 15-20%.
Globally, the firm’s total assets under control at present are at £7.1 billion (Rs57,439 crore) and it invests £1.9 billion a year across the world. In the fiscal year ended March, it invested in 62 companies, of which five were in India.
The firm’s international portfolio (outside the UK) currently accounts for 60% of its total portfolio value, which was £5.1 billion in March.
India has become a preferred destination for PE investors. Domestic and foreign PE funds have, thus far this year, announced deals worth $6 billion in India and invested $2.98 billion, according to Thomson Financial.