JPMorgan plans $2 bn infra fund

JPMorgan & Chase Co, the third-largest US bank, has set up a $2 billion fund focusing on infrastructure investments in India, where spending on roads, ports and power may double over the next five years.

The fund would be ready to invest in companies and projects by the end of this year, Anil Bhalla, the managing director of the Asian Clients Group at JP Morgan Securities, said in an interview in Mumbai yesterday.

JPMorgan joins the Blackstone Group, Citigroup and ICICI Bank in starting infrastructure funds in India, the world's fastest-growing major economy after China.

The nation may ease borrowing restrictions to help finance an estimated $500 billion required in public works by 2012, according to Finance Minister Palaniappan Chidambaram.

"Investors are now realising India's potential as it evolves into a global player,'' said Ram Kolluri, the chief investment officer at Global Investment Management in New Jersey.

India, which spends about 5 per cent of its $906 billion gross domestic product (GDP) on infrastructure, needed to raise it to 9 per cent, Chidambaram said yesterday. The economy, growing at an average 8.6 per cent over the past four years, might grow at 9 per cent this year, he said.

Blackstone, Citigroup and two Indian companies in February announced a plan to set up $5 billion fund for investing in Indian infrastructure projects.

Sustaining Growth
"Nothing is more important to sustain growth than infrastructure,'' Chidambaram said yesterday. "The rate of investment in infrastructure is lagging behind the rate of economic growth,'' he added.

The 3i Group, Europe's second-biggest publicly traded private equity firm, said in August it planned to raise about $1 billion for a fund to invest in Indian projects, including ports, power plants and roads. Lack of investment in utilities cut about 2 per cent from India's economic growth, 3i said in August.

India's highways, which move more than four-fifths of all goods in the nation, account for just 2 per cent of 3.4 million kilometres of its roads.

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FUELLING GROWTH

The fund will be ready to invest in companies and projects focusing on infrastructure by the end of this year

JPMorgan joins the Blackstone Group, Citigroup and ICICI Bank in starting infrastructure funds in India

India, which spends about 5 per cent of its $906 billion GDP on infrastructure, needs to raise it to 9 per cent