The Venture Intelligence Blog

An ET article quotes Venture Intelligence data on PE investments in road sector Private equity (PE) investments in the roads sector have shot up to a decade high of $1,827 million (approximately Rs 12,240 crore) in 2018 so far according to the data from Venture Intelligence. This was boosted by $1,487 million investment by Macquarie in a toll-operate-transfer (TOT) project of NHAI in March 2018. In 2017, PE funds had invested $465 million. Click here to continue reading. Venture Intelligence is India's longest serving provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India.

A Mint article quotes Venture Intelligence data on PE/VC investments in infrastructure investments: (Click to view) Venture Intelligence is India's longest serving provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India.

Writing in the Business Standard , hedge fund manager Akash Prakash points out some of the India-specific challenges in investing into this sector. The reality is that the Indian infrastructure sector does not have the size, financial muscle and market clout to fund the infrastructure this country needs. While power projects may still go ahead, as we have 4-5 large power developers with a combined $28 billion of market cap, $27 billion of market cap has to support everything else from roads to ports, airports, sanitation, etc. Again, the needs dwarf the capital, which can be raised. ...Thirdly, markets have ignored the sector, given the poor economics demonstrated. Most infra projects/developers generate no-free cash flow, have low ROE’s and are very susceptible to project delays and policy risk. Investors are tired of projects stuck in red tape or subject to the whims and fancies of ministers. Most of the large infra projects are also seen to be disguised bets on real estate, as their...

At a time when India- and Asia-focused infrastructure funds are being announced at a rapid clip, Jay A. Yoder, Partner and Head of Real Assets at fund-of-funds firm Altius Associates, provides an analysis of the advantages and downsides of this asset class in an article published in AltAssets. Extracts: The advantages Adding infrastructure to an existing portfolio can be expected to provide investors with several important benefits, including attractive returns, moderate risk, diversification, and inflation hedging.... We believe that the best private infrastructure managers can provide net returns to investors of 10 to 14 per cent... At the same time, we expect the volatility to be moderate; somewhere between equities and fixed income. Infrastructure assets are likely to provide a good hedge against inflation. Most infrastructure-related contracts contain clauses that allow for price increases tied to inflation....Our view is that an overweight to the energy subsector greatly increas...

Edited extracts from the Press Release: Agra-based EPC (engineering, procurement and construction) and infrastructure development company PNC Infratech Limited (PNC) has received Rs.150 crores as an equity investment from NYLIM Jacob Ballas India Fund III, LLC (“NYLIM-JB Fund”), a Mauritius based Private Equity investor. PNC specializes in construction of highways, bridges, flyovers and airport runways, having built more than 1,000 km of highways and executed 17 airport runway projects till date . Commenting on the deal Mr. Pradeep Kumar Jain, Chairman and Managing Director of PNC said “The infusion of funds will help the company strengthen its balance sheet further, enabling it to bid for larger projects. PNC will use the funds to meet its capital expenditure and working capital requirements as also to part finance the equity contribution for its BOT projects to be developed in separate SPVs.” Mr. Sunil Chawla, Partner, Jacob Ballas Capital India Pvt Ltd (“JBC”), investment advisor ...

The Deal magazine has a Cover Story on infrastructure investment opportunities in the BRIC countries with a special highlight on India. Of all the emerging markets, India best illustrates the benefits -- and the pitfalls -- of PE investment in infrastructure. It has one of the longest track records and runs neck and neck with China in attracting the most infrastructure-related funds and investments. "There's no better place to be," says 3i's Bagla. ...AMP launched its first Asian infrastructure fund in 1994, as did American International Group Inc., through its asset management arm. AMP pioneered the field in India five years later, starting a modest $40 million fund fashioned in conjunction with Indian mutual funds manager Unit Trust of India, now UTI Mutual Funds. That fund is fully divested. AMP launched a second, $120 million fund in 2004. Britain's 3i started to invest in India in 2005 as part of a global infrastructure fund. It really cranked up participati...

Sanjay Sethi, ED & Head of Infrastructure Group, Kotak Investment Banking has an article in the Economic Times on the current challenges in raising PE funding for infrastructure projects and what's needed to boost such transactions. What India needs: India could well do with more pure-play specialist infrastructure funds with long-term investment horizon and reasonable return expectations (in the midto-late teens).This may attract infrastructure developers who would otherwise consider listing themselves,most of them somewhat prematurely,and raise capital even at the cost of higher dilution. SPV-level investors in greenfield projects: Most PE as well as infrastructure funds are currently focused on entity-level deals with a mix of operational,under implementation and under development projects with clear visibility of an IPO in the next 3-4 years which provides them an exit opportunity.While a couple of SPV-level investors are currently operating in the country,there is room f...

Business Today has short profiles of mid-tier Engineering & Construction companies that are aiming to bag more Build-Own-Transfer infrastructure projects. Extract from profile of IRB Infrastructure that went public recently. The prominent toll roads IRB has on its hands include the Mumbai-Pune Expressway, along with two highways that connect Pune with Sholapur and Pune with Nashik. The company also recently bagged toll collection rights for a 239-km highway between Mumbai and Surat. “Currently our toll collections are Rs 1.2 crore a day, and from next year, it will be Rs 3 crore,” says Mhaiskar. In 2007-08, IRB’s revenues of Rs 785 crore were equally split between construction and BOT projects. When executing BOT projects, IRB functions as a holding company, and each project is spun off into a special purpose vehicle (SPV). These separate entities help diffuse risk and make capital-raising simpler. To further mitigate risk, the company is looking at developing the area around high...