IDFC Project Equity has raised $880 million as part of its $5-billion fund-raising plan and intends to raise another $1 billion in around three years.
The $5-billion fund, which will have IDFC and Citi as sponsors, will include an equity component of $2 billion, while the rest will be debt-raised by leveraging assets.
“We decided to start with $1 billion as investors are ready to pay a commitment fee for a smaller amount, while the rest we will raise in the coming days,” said IDFC Project Equity President & CEO MK Sinha.
Sinha said the fund has already invested in four road projects and the cumulative investment was $80 million. He added that the fund was looking at investing in special purpose vehicles with an average investment size of $30-50 million.
“Our focus area is core infrastructure such as power generation, roads, ports and airports. We are looking at telecom towers and water supply projects,” Sinha said.
He said that over the last few months, there had been increase in the number of proposals and the company was in the process of finalising more investment.
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Sinha said the fund expected average returns of around 18 per cent on its investment and will explore the possiblity of an initial public offering in around five years. “When it comes to returns we really look at the income flows because we are in the core infrastructure business,” he said.
“Eventually, in 5 years’ time, we would go for an IPO. But, at the moment, there is no plan to exit by way of an IPO as we perceive the public market is not likely to improve over the next two years,” Sinha said.