United Kingdom-based Eredene Capital, which has a $100 million (Rs 460 crore) infrastructure fund in India, is planning to increase its fund size.
The AIM-listed (Alternative Investment Market, a sub-exchange of the London Stock Exchange) entity could either raise another fund or issue fresh equity to increase its capital base.
These fresh investments would help Eredene increase its investment in the infrastructure sector in India. The company sees an investment opportunity of $150-300 million in this space over the next two years.
“We are in discussions with investors across the US, Europe and the Middle East. We cannot mention the size of the fund, as we do not know the commitment we would get from these investors. Investors and limited partners are cautious because of the European crisis. But India has a fine growth story and the infrastructure sector is also growing, so we think we can sell this to investors,” said Nikhil Naik, Non-Executive Director.
Eredene had recently won the bid to develop a container terminal at Ennore Port in a consortium with Lanco Infratech and Obrascón Huarte Lain, for a total investment of £207 million (Rs 1,450 crore). Eredene’s equity commitment to this project is about £23 million (Rs 160 crore), spread over 48 months.
Of the $100 million raised during its listing on AIM in 2005 and through a placement in 2009, Eredene has committed $92 million (Rs 420 crore) across nine infrastructure projects in India — container freight stations, logistics parks, warehousing and third-party logistics.
Also Read
The company would also need funds because its investment commitments in Indian infrastructure have gone up. Eredene has put in a bid to upgrade and manage bulk and liquid cargo berths at Mumbai port in a consortium with Conti7, the Belgian shipping group.
It has also put in a joint bid to build and operate a four-berth terminal at New Mangalore port, in a consortium with Barcelona-based Group Maritim. Eredene has 46 per cent stake in this joint bid. It has also bid a project at Jawaharlal Nehru Port Trust (Navi Mumbai) which has been held up in legal wrangles.
However, the company has, apart from its £16.4 million investment in a real estate venture with Matheran Realty, pulled out its investments from other real estate projects.
“We exited our real estate ventures in 2007 and I think the timing was right. While we are invested in Matheran Group, we do not plan to invest any more in real estate projects. But we see good opportunity in the Indian infrastructure sector and we have the required expertise in this space,” said Naik.
Eredene plans to invest in roads, ports and airport projects. The company expects its invested rate of return to be 20 per cent and wants to keep the average investment period to five years. It expects strategic sale of its stake in projects to keep in line with an early exit strategy.
On an average, infrastructure funds stay invested longer than the average investment period of private equity firms, which is five years.