StanChart, IL&FS to raise $1 bn core fund

Standard Chartered and IL&FS Investment Managers (IIML) are close to signing an agreement to raise a $1 billion India-focused infrastructure private equity (PE) fund. IIML is the publicly-listed private equity arm of Infrastructure Leasing & Financial Services.

According to information available, the two companies are expected to finalise a joint venture to manage the fund which will be announced by end-July.

While IIML's spokesperson declined to comment, Stanchart officials could not be reached. This joint effort is the second in succession for IIML after it recently signed a joint venture pact with Abu Dhabi Investment Company (ADIC), promoted by the government of Abu Dhabi, to raise a $1 billion PE fund. The fund will invest in infrastructure assets in West Asia and North Africa.

ADIC and Infrastructure Leasing & Financial Services are likely to commit around $50 million to the proposed new Fund. The investment manager of the fund would be a 50:50 joint venture.

Standard Chartered has invested around $250 million of its $750 million general private equity fund for Asia in India over the past four years.

According to information available, the JV is expected to follow the ADIC model and be an equal one. Standard Chartered's Principal Finance arm is understood to be front-ending this pact from its Singapore office.

This decision by Stanchart to take part in infrastructure funding comes just months after global financial institutions such as Blackstone, Citigroup, 3i, are forming various consortia to invest up to $10 billion over the decade in India.

According to independent estimates, close to a $1 billion has been committed in Indian engineering and construction companies during the past 18 months.

Analysts indicate that there is tremendous amount of scope for such investment given the fact that as much as $320 billion is needed to develop India's infrastructure to the desired levels in the coming years.

"While the gestation periods remain long, investors have been attracted by the rising focus and spending on infrastructure by the government. These sectors also provide a much-needed diversification from the gyrating capital markets," said an industry analyst.

For IIML, this is another step forward in its fund raising spree.

In an unprecedented fund raising rush, the company is cumulatively raising close to $2.5 billion. In addition to the $2 billion, it will raise in pacts with Stanchart and ADIC, close to $400 million through general PE funds by October.