IDFC Alternatives closes second infrastructure fund at Rs 4,081 crore

NEW DELHI: IDFC Alternatives, the asset management arm of diversified financial services company IDFC, has made the first close of its second infrastructure fund at $644 million (Rs 4,081 crore), making it one of the largest private equity fund closures in recent times.

The $1 billion India Infrastructure Fund-II will invest in core infrastructure sectors, including, roads, ports, airports and oil and gas pipelines, according to MK Sinha, managing partner and CEO at IDFC Alternatives.

“These are the need of the hour, and we expect to announce our first investment from the new fund next month. The final close of the fund should take place by the end of the year,” Sinha told ET.

Global investors have invested a total of $580 million (Rs 3,675 crore) in the fund, which was launched in January this year while IDFC has stepped in as one of the cornerstone investors, after committing $64 million (Rs 406 crore) to the fund corpus.

“There has been a substantial commitment by our existing offshore investors, who hold a long term view on India and aren’t frazzled by the short-term scenario,” Sinha said.

The fund will look to invest in ventures that are over-leveraged, and are on the lookout for equity to pare down debt, according to Sinha.

“This is not a distressed asset fund. We are looking at safe assets that are operational. There will be massive deleveraging taking place in the infrastructure sector, and we will look to buy out their operating assets with equity,” Sinha said.

The Singapore-registered 12-year fund, which will look to generate returns in the “high tens”, will stay invested for between eight and 10 years, with average investment ticket size of $75 million (Rs 475 crore).

IDFC Alternatives, which manages assets to the tune of $2.8 billion (Rs 17,744 crore), invests in three asset classes, namely, infrastructure, private equity and real estate.