AMP Capital Investors, the fund management unit of Australia's biggest life insurer, may raise as much as US$500 million (HK$3.9 billion) to invest in Asian power and port projects, with more than half destined for India.
AMP Capital may raise US$400 million to US$500 million for its next fund “which will concentrate substantially on Indian infrastructure,” said Singapore-based Krishan Sehgal, who oversees the firm's investments in Asia.
AMP Capital, Citigroup, Blackstone Group Holdings and other private-equity investors are flocking to India as the government seeks to build and modernize US$320 billion worth of airports, power plants, ports and other infrastructure by 2012.
India's economy grew 9 percent to US$854 billion last year, a pace second to China among the world's major economies.
“With the need for infrastructure and the size of the Indian economy, how it is growing, you clearly see an opportunity there,” Sehgal said.
The unit will start raising the money once it has finished investing US$102 million from an existing fund that focuses on Indian infrastructure projects, Sehgal said.
AMP Capital has invested almost 60 percent of that money and will spend the rest in the next few months, he said. The fund, which has invested in four projects, including Gujarat Pipavav port in western India, has notched up an internal rate of return of 30 percent, he said.
Blackstone, manager of the world's biggest buyout fund, and New York-based Citigroup this month signed an agreement to start a US$5 billion fund to invest in Indian infrastructure projects.
Reducing bottlenecks may encourage companies such as Intel Corp, the world's largest computer chip maker, and Ford Motor to invest more. Manufacturing makes up 17 percent of India's US$854 billion economy, half the ratio in China. The Finance Ministry estimates inadequate power and transport networks shave two percentage points off annual economic growth.
The government will need overseas and non-state funding as India is bound by law to cut its budget deficit by 0.3 percent of gross domestic product each year until 2009, constraining its ability to build infrastructure after spending almost half the federal budget on defense, subsidies and interest payments.
Foreign investors poured about US$60 billion into China in 2006 alone, compared with a total of US$50 billion in India since 1991, when it began opening its economy.
Prime Minister Manmohan Singh wants to sustain growth of over 9percent in the next decade to eradicate poverty.
AMP Capital will continue to invest in ports as container volumes grow, Sehgal said. The fund will also focus on power generation, seeking to capitalize on surging demand.
Source : Bloomberg