TPG Cap to Raise $4-b Global Infra Fund, India on Radar
While the India allocations have not been finalised, industry watchers say PE fund may look at distressed projects in core infrastructure space ₹ ₹
Mumbai: India’s cash-strapped power plants and stranded highway projects may soon attract the attention of bulge-bracket private equity firm TPG Capital. The marque US investor, famous for leveraged buyouts, is getting ready to raise a $4-billion (.`26,588-crore) global infra fund and, people in the know said, emerging markets including India will be among the core destinations for the capital.
“It is in a formative stage, but we hope to close the fund by the end of this year. The money raised through the funds would be deployed only in infrastructure companies,” said a person close to the matter. “These are potentially large cheques, so we may look at coinvesting opportunities with the existing buyout fund (of TPG),” added another person.
The exact India allocation has not yet been finalised, the people said. The fund will be among the largest such infrastructure-focussed pools of capital in the world.
In a response to ET’s email seeking comment, a TPG spokesperson said: “We do not comment on market speculation.” The global investment committee of TPG had visited India a month ago. Jim Coulter, the fund’s cofounder, told Bloomberg in March that he was bullish on India and saw a $131-billion opportunity in Indian distressed assets. “In India, we would like to find a way to invest a billion a year for the next three years if we can find the right investments,” Coulter had said.
TPG operates through its buyout and middle market, growth equity investment platforms in India and had invested $1.5 billion, Coulter had told Bloomberg.
Depending on the final fundraise, TPG may even have a dedicated team to source and manage the investments, the people ET spoke to said. It has not yet appointed anyone though.
Being a largely regulated space, the fund has typically stayed away from bankrolling India’s creaky infrastructure, choosing to back consumer-focussed companies in technology, healthcare, retail and financial services instead.
But with ballooning distress emerging in core sectors such as power, cement and steel, experts feel global investors like TPG are now sensing new opportunities to move in and corner several of these assets. Many of these projects have been hit in recent years by an economic downturn that crimped cash flows. Banks with exposure in many indebted infrastructure companies are also converting their loans into equity under the strategic debt restructuring mechanism and inviting new investors to come in and take over the management.
TPG is familiar with distressed situations in India. In 2011, it was one of the first foreign investors to acquire Vishal Retail in a complicated, multi-tiered transaction involving a regulated sector like multi-brand retailing.
Sovereign wealth funds and Canadian pension capital too have be- en equally keen to back operating projects in the road and port sectors, betting on their long-term viability as the economy is gradually turning around.
The central government is wooing global investors to fund its ambitious programme of 100 smart cities, beefing up the Indian railway network and highway projects worth $93 billion.
If some of these transactions do get consummated, then analysts expect foreign investment in infrastructure leapfrogging recent inflows.
Data from consulting and accounting firm EY show deal volumes in infrastructure in 2015 remained at the same level as that of the previous year with 91 mergers and acquisitions. However, deal values declined by nearly 60% to $2.5 billion.
The govt has been wooing investors to fund 100 smart cities, highways and railways Size of TPG’s Global Infrastructure Fund
Total Stressed Loans Of Indian Banks
Estimated Stressed Loans Of Infra Cos
TPG could appoint dedicated fund managers for India infrastructure play
Total money raised by TPG between 2009 and 2015 (2nd-highest among all PEs)