The economic slowdown, coupled with the fact that infrastructure projects require huge investments restricted investors from making new investments in private equity (PE) infrastructure funds over the past few quarters.
“Steep decline in infrastructure funds during last year due to weak market sentiments has adversely affected the sector on a whole,” says Anshul Kumar Saxena, Managing Partner of Sri Jai Vishnu Infra Consultants, an infrastructure consultancy firm in Mumbai.
But the situation is likely to revive for the asset class by the end of 2009, according to the report titled ‘Infrastructure Spotlight’, prepared by the global research and consultancy firm Preqin.
 The first quarter of 2009 reported an improvement in performance of unlisted PE funds investing in the infrastructure space. These infrastructure funds are not listed on a stock market and invest in both infrastructure assets as well as infrastructure-related companies. These unlisted PE infrastructure funds stood at US$71.5 billion in June 2009, reflecting a steady rise since 2003.
Bright future
This improvement in the performance of PE infrastructure funds is expected to continue over the coming years. Infact, the ‘Infrastructure Spotlight’ report further added that infrastructure fund raising will heighten to such an extent that infrastructure dry powder levels (meaning capital available for deals) is likely to touch US$100 billion by 2012.
“There is no doubt that this renewed investor interest in the asset class, along with the government’s impetus on infrastructure projects in the Union Budget 2009-10 will definitely give the infrastructure sector in India a boost,” opines J Bhattacharjee, Proprietor of J Bhattacharjee & Company, a New Delhi-based equity broking farm.
Going forward, stability in the economy and the realisation among investors that infrastructure funds are low in risk and provide stable returns in the long-term will draw more investors towards the asset class, thereby triggering infrastructure growth in the country.
Jeeta Bandopadhyay |
