Clear Trade floats $12 bn infrastructure fund

Clear Trade, a US-based private equity firm with Indian roots, has floated a $12 billion fund in association with leading US private equity companies to exclusively invest in upcoming power and infrastructure projects over a five year period.

Philip Ho, managing director of the US PE firm Cornell Capital, Axis Bank-promoted Axis Private Equity, Morgan Stanley and other leading US funds, including one of the largest PE players in the hospitality sector are participating in this fund. Clear Trade is also talking to some leading European pension funds to join the fund.

Power Finance Corporation (PFC) is likely to pick up 20 per cent and has given a letter of intent to join the "Clear Investments Power and Infrastructure Fund", Deepak Kavadia, managing director of Clear Trade told Business Standard in a telephonic interview from the US.

The initial corpus of the fund "" set to kick off in the first week of April "" will be $1 billion. "We will close this fund within 18 months and raise $2.5 billion. Majority of the investments will be in the power sector, especially thermal projects" he said.

Clear Trade has identified about 11 power projects for investments in the first phase, including two projects of over 1000 mw promoted by two leading corporate houses based in Hyderabad and Mumbai, besides two hydro-electric projects coming up in the north east.

Kavadia said he has been approached by many power companies in the last few days as those who were planning public offers need private equity in the changed market situation.

According to industry observers, it will be the first India specific major power and infrastructure fund to firm up its India plans, given the 78,000 mw capacity addition planned in the next five years.

Though PEs such as 3i, JP Morgan, Goldman Sachs and the home grown IL&FS and ICICI Venture are planning power sector funds, their corpus is comparatively smaller.

"We will restrict ourselves to picking up 6-10 per cent of equity in these projects, ideally of 1000 mw and above, and have a long term perspective of 3-7 years as the gestation period for power projects is long," said Palak Jaiin, CEO of Clear Trade.

Clear Trade would also join hands with seasoned corporates to bid for the remaining ultra mega power projects coming up in India. About 70 per cent of power sector investment will be in the thermal sector, she added.

The promoters of Clear Trade have a combined experience of over 30 years in the PE field and have closed over 50-60 deals.

The investments include Australia Energy Corporation, China Energy Corporation and some of the largest mining companies in the world. The promoters also have interests in the diamond trade, with a base in Mumbai.