Mumbai: Edelweiss Infrastructure Yield Plus, an alternative investment fund managed by Edelweiss Alternative Asset Advisors Ltd, expects to achieve a first close of around $250 million by the end of February, a senior executive of the firm said.
Edelweiss is targeting a fund size of around Rs2,000 crore, with an additional green shoe option of Rs4,500 crore, and is currently in the fundraising mode. Mint was the first to report in November that Edelweiss was planning to raise up to a billion dollars for an infrastructure focused fund under its asset management business.
“We expect to hit the first close of around $250 million for the fund by end of the month. For the first close we have focused mostly on domestic capital and we have tapped large family offices and high net-worth individuals," Nitin Jain, chief executive, global asset and wealth management, Edelweiss Group, said at a media roundtable discussion in Mumbai on Monday.
“Post the first close we will start focusing on overseas investors such as pension funds and insurance companies," Jain added.
“In India, currently, $700 billion of operating infrastructure exists, of which 40% is in private hands. In the next five years, about an additional $455 billion will be required for infrastructure development and infrastructure developers are looking to monetise operating assets to reduce the stress on over-leveraged balance sheet and finance their greenfield/under-construction projects, hence, we believe there are great opportunities in the market for this fund," he said.
The infrastructure fund will be led by Subahoo Chordia, who was previously associated with the group’s investment banking business.
The fund will invest only in operating assets in sectors such as roads, renewables and transmission.
“The fund will invest and own operating infrastructure assets with credible counterparties such as NHAI, NTPC and others and assets that have low operational risks," said Choradia.
The fund will focus on acquiring operating assets from mid-sized developers in India with investment ticket sizes of around $30-50 million, he said. Around 60% of the funds will be used to acquire road assets, Choradia added.
“In terms of exit, the fund will aggregate assets and then either look at listing them under an InvIT (infrastructure investment trust) or sell them to strategics of larger investors. The fund is looking at delivering returns in a range of 18-21% to investors," he said.
The Edelweiss Infrastructure Yield Plus has been rated “CRISIL Fund Management Capability Level - 1", the highest such rating for pooled investment vehicles, the firm said in a separate statement on Monday.
“According to CRISIL, Edelweiss Infrastructure Yield Plus has a strong team across functions, with the investment management team and operating team comprising members with extensive experience in the infrastructure space. Furthermore, the fund investment committee comprises senior management of the Edelweiss group from various functions, including investment and risk management, with experience of more than two decades," statement said.
The Edelweiss group, through its asset management business, manages various funds across asset classes such equity, real estate, distressed credit and private equity. The firm manages around $9-9.5 billion across its various funds.