Nick Van Gelder Macquarie agree to join with SBI india

Posted by on Jul 19, 2010 | Leave a Comment

With the launch of a $US1 billion ($1.4 billion) joint-venture infrastructure investment fund, MACQUARIE Group is looking to India and its vast capacity for infrastructure growth to cheer a moribund balance sheet. To raise capital for investment in ports, roads and power plants across the South Asian nation, Australia’s biggest investment bank, Macquarie has joined up with the State Bank of India, the India country’s largest lender, and the World Bank’s International Finance Corporation (IFC).

State Bank said in a statement to the Bombay Stock Exchange, “Further capital raising this year by the Macquarie-SBI Infrastructure Fund could take the total funds to as much as $US3 billion.” $US887 million have already been committed by International investors and a $US150 million given by SBI in contribution, brings the total capital raised so far to $US1.037 billion. An additional $US150 million each have been also committed by State Bank, Macquarie and IFC to bring a total of $US450 million of sponsor commitments.

A spokesman said, “India’s Power Trading Corporation is likely to be the first investment target but the joint-venture fund will also look at investing in Greenfield and established projects in the area of roads, sea ports and airports, gas distribution, telecommunications and logistics businesses.” India is a disreputably difficult investment market and in spite of the gradual breakdown of “Licensing Raj” of the country since 1991, rules for direct investment in India remain onerous.

The need to attract foreign investment has been identified by India’s Planning Commission to raise an estimated $US500 billion for infrastructure projects in the next five years. To encourage private investment, the Government is now looking for with the Indian economy growing at its slowest pace in six years. It has announced, “three stimulus packages since December, including 700 billion rupees ($19.5billion) of projects since August to build new roads, ports and highways.

In recent months, severe share market value declines have been experienced by both Macquarie Infrastructure Group and Macquarie Airports, Macquarie’s two main infrastructure arms. “The new fund was part of a long-term strategy to corner a foothold in the massive Indian investment market, across a number of business and infrastructure sectors,” said by Macquarie Capital Funds Asia chief Nick van Gelder.”

Mr van Gelder told The Australian, “For us this is a key plank of our infrastructure business.” he said, “The logic for infrastructure funding (in India) is more acute now than it’s ever been because other sources of capital are less available to infrastructure markets,” and added “Macquarie expected a large number of investment opportunities to come the way of the fund that may not have in 2007,” and “The number of Indians without access to running water, sewage and electricity is just incredible. In those areas there’s room for investment.

Through a domestic entity called the SBI-Macquarie Infrastructure Trust (SMIT), Indian domestic institutions will invest and Foreign institutions will invest through MSIF. The fund will target traditional infrastructure assets that generate long term identifiable cash flows.


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