Mumbai: A wholly owned subsidiary of Tata Sons Ltd, Tata Realty and Infrastructure Ltd(Tril), is likely to join hands with sister company Tata Asset Management Ltd, which runs Tata Mutual Fund, to float an offshore fund that would invest in infrastructure projects in the country.
Development push: A hanger at Singapore’s Changi Airport. Tata Realty has signed an agreement with Changi Airports International to form a JV for developing non-metro and greenfield airports in India.
The offshore infrastructure fund is expected to raise around $1.5-2 billion (up to Rs7,860 crore). Tril, the real estate arm of the Tata group, is focused on the real estate and infrastructure projects.
“We are finalizing the modalities for launching this fund,” said a senior Tata group executive, who did not wish to be identified. “This should touch the overseas market by early 2008.”
An offshore fund is a financial instrument to raise money from international investors for investment in domestic assets. Finance minister P. Chidambaram, who recently attended a seminar on infrastructure, said India needs to raise at least $488 billion for infrastructure development over the next five years. “Financing infrastructure is critical,” he said. “It is imperative to raise infrastructure spending from 5% to 9% of the gross domestic product (GDP) by 2012 and we believe that 70% of this investment must come from the public sector and 30% from the private sector.”
A person familiar with the development said Tril currently is in talks with Tata Mutual Fund for a joint fund-raising exercise. Tata Mutual Fund has recently collected about Rs2,200 crore through its Tata Indo-Global Infrastructure Fund.
Tata Mutual Fund manages around Rs20,517.66 crore (as on 30 September) worth of assets across its varied offerings, according to the company’s website.
“Several international investors are keen to participate in India’s infrastructure growth through our proposed funds,” the Tata group executive said. “Tata Mutual Fund’s presence will help us to tap the market in a better way.”
The fund will be used for investing in various transport and infrastructure projects, such as airports, special economic zones, logistics parks and urban infrastructure, a Tata spokesperson added.
Tata Realty is in the process of raising $750 million through another offshore fund for investment in real estate projects. The fund will be closing by this month-end.
“Financial agencies such as Citibank N.A., Blackstone Group, JPMorgan Chase & Co. and 3i Group Plc. have announced offshore funds to finance infrastructure projects in India,” said Vinayak Chatterjee, chairperson of Feedback Ventures Pvt. Ltd, an infrastructure advisory, engineering and project development company. “The move by companies such as the Tata group would further gain confidence of overseas investors.”
Tril has signed an agreement with Changi Airports International Pte Ltd, which operates Singapore airport, to form a joint venture (JV) for developing non-metro airports and greenfield airports in the country.
The firm also has signed a 50:50 JV with Dubai-based Jafza International, which operates Jebel Ali Free Zone, to develop a chain of logistics parks across the country.