3i Group Plc, Europe's largest publicly traded private equity firm, plans to start a $1.5 billion fund in about six months to invest in Indian infrastructure including railways, ports and roads.
The fund, to be based in London, would probably target a return of between 13 per cent and 18 per cent, Chief Executive Officer Michael Queen said in an interview in New Delhi today. Queen is traveling as part of a delegation with UK Business Secretary Vince Cable, who is seeking to increase exports and secure investment for Britain. 3i, one of the U K's oldest private equity firms, is seeking to boost profit after the credit crisis slowed deal- making. India is planning to spend about $1 trillion in the five years to 2017 on upgrading its transport and power networks, which are ranked below those of war-ravaged Ivory Coast.
“india is one of the very few markets in the world showing very strong growth," Queen said in response to a question about whether there is investor demand for an Indian infrastructure fund. "Infrastructure is absolutely needed here and money does tend to follow both those characteristics.”
Queen said any new fund would invest in railways, education and healthcare, compared with the firm's current $1.2 billion fund, which mainly invests in power, airports and roads.