GMR may invest in core sector PE funds

GMR Group, the Rs 3,000 crore infrastructure major with focus on power, roads and airport projects across the country, is mulling over investing in infrastructure private equity (PE) funds.

This move, when it happens, will mirror the trend in the mature technology venture capital (VC) industry where companies such as Intel, SAP and Siemens manage their own or invest in various technology VC funds.

According to a senior official of the GMR Group, the company has got proposals from several PE funds to invest in them.

"We haven't decided on any funds. We are mulling over various funds and if we find them attractive, we may consider them. The current focus of the company, however, is to complete the projects in hand such as revamping the Delhi Airport and completing the greenfield Hyderabad international airport."

An official spokesperson for the company said that they would not be able to comment on investment in PE funds at this point of time.

The group has an inherent expertise in managing funds and investments given the fact that it once controlled Vysya Bank before exiting in favour of the ING Group.

According to information available, GMR Infrastructure, the flagship of the group, has cash reserves of around Rs 1,200 crore and only Rs 120 crore in debt. It is also learnt that GMR was initially considering a infrastructure private equity fund on its own, which has since been dropped.

"It would have been stretching for us to manage a PE fund. We found that investing in professional PE funds will be better," the official noted.

According to industry analysts, the move by GMR to consider investing in PE funds marks a paradigm shift in infrastructure financing, from being largely debt financed to private equity financed.

This move by GMR comes at a time when global companies such as Blackstone, 3i Group, Citigroup are forming various consortiums with Indian funds to invest in excess of $5 billion in building India's infrastructure.

While IL&FS has been ploughing a lonely furrow over the years by investing in infrastructure, companies such as IIFC, IDFC and a host of other funds over the last few years have upped their ante in this sector.

The GMR Group, in addition to the two airports and various road projects, has an installed power generation capacity of 830 mw and is putting in place infrastructure for an additional 2,500 mw. Going forward, the group is expected to actively seek opportunities for infrastructure development including realty, construction and transportation.

CONCRETE STEPS

The move will mirror the trend in the mature technology venture capital industry

The company has got proposals from several PE funds to invest in them

The group has an inherent expertise in managing funds and investments given the fact that it once controlled Vysya Bank before exiting in favour of the ING Group