Asia-focused infrastructure funds raising $18 billion

India is at the forefront of asset raising for investment opportunities, according to consultancy Preqin.
This year some $18 billion is being raised globally for investments into infrastructure funds aimed primarily at Asia, with India receiving the lionÆs share, according to data compiled by Preqin, a London-based consultancy that focuses on non-listed investments.

How much of that money will actually be raised, let alone deployed, remains to be seen, but Tim Friedman, head of publishing at Preqin, says global fund managers are likely to close $3-5 billion in 2008.

This represents a notable jump on 2006 and 2007, which each saw around $1 billion of funds raised for Asian infrastructure. ôWeÆve seen an increase in demand for infrastructure investments worldwide but this focus on Asia is recent,ö Friedman says.

Both JPMorgan and Macquarie Funds Management are raising $2 billion funds for India: the JPMorgan Chase India Infrastructure Fund and the Macquarie India Infrastructure Opportunities Fund.

London-based Actis, a private-equity investor in emerging markets, is also raising a $1 billion fund for Asia, while Axa Private Equity, Axis Private Equity, Babcock & Brown and Baer Capital Partners are raising smaller funds.

But the real story is how local investment groups are now raising huge amounts to invest in their own or in regional markets, led by those in India.

India-based organisations putting together infrastructure funds include ICICI Venture Funds Management ($2 billion), IDFC Private Equity ($1.2 billion), Atherstone ($1 billion), Kotak Private Equity ($1 billion), Tata Realty and Infrastructure ($1 billion) and UTI International ($600 million).

In addition, some Indian firms are teaming up with foreign capital to launch India-themed infrastructure funds, including IL&FS with Standard Chartered (the $1 billion SC-IL&FS Asia Infrastructure Growth Fund) and India Infrastructure Finance and 3i Group (the $1.2 billion 3i India Infrastructure Fund).

Other regionally based firms are also capital raising, including Jakarta-based Saratoga Capital Group and Indochina Capital in Ho Chi Minh City.

Mark OÆHare, director at Preqin, says this surge in capital raising reflects three factors: the tremendous need for infrastructure development throughout many parts of Asia; growing interest in infrastructure as an asset class among global pension funds, who like how it matches their long-term liabilities for moderate levels of risk; and the growing comfort they have with emerging markets, particularly India and China, which reflects their willingness to invest not only with the JPMorgans and Macquaries of the world, but with indigenous private-equity groups.
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