JPMorgan floats $2 bn infrastructure fund

JPMorgan floats $2 bn infrastructure fund

Mumbai: JPMorgan & Chase Co., the third largest US bank, set up a $2 billion (Rs7,880 crore) fund focusing on infrastructure investments in India, where spending on roads, ports and power may double over the next five years.

The fund will be ready to invest in companies and projects by the end of this year, Anil Bhalla, managing director of the Asian Clients Group at JP Morgan Securities Inc., said in an interview on Monday.

JPMorgan joins Blackstone Group, Citigroup Inc. and ICICI Bank Ltd in starting infrastructure funds in India, the world’s fastest growing major economy after China.

The nation may ease borrowing restrictions to help finance an estimated $500 billion required in public works by 2012, according to finance minister P. Chidambaram.

“Investors are now realizing India’s potential as it evolves into a global player," said Ram Kolluri, chief investment officer at Global Investment Management in New Jersey.

India, which spends about 5% of its $906 billion gross domestic product on infrastructure, needs to raise it to 9%, Chidambaram said on Monday.

The economy, growing at an average 8.6% over the past four years, may grow at 9% this year, he said.

Blackstone, Citigroup and two Indian companies in February announced a plan to set up $5 billion fund for investing in Indian infrastructure projects.

“Nothing is more important to sustain growth than infrastructure," Chidambaram said on Monday.

“The rate of investment in infrastructure is lagging behind the rate of economic growth."

3i Group, Europe’s second iggest publicly traded private equity firm, had said in August that it planned to raise about $1 billion for a fund to invest in Indian projects, including the port, power plants and road sectors.

Lack of investment in utilities cuts about 2% from India’s economic growth, 3i said in August. Growing demand for infrastructure services has increased orders for companies in the sector, boosting their stocks.

Shares of Larsen & Toubro Ltd, India’s biggest engineering company, have almost tripled this year and those of Bharat Heavy Electricals Ltd, the nation’s biggest power-equipment maker, have more than doubled since 1 January. The Sensex index rose 45% in the same period.

India’s highways, which move more than four-fifths of all goods in the nation, account for just 2% of its 3.4 million km of its roads. BLOOMBERG