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 ₹ ₹

The Economic Times - - Companies - Sachin.Dave@ times­group.com

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.

Dol­lar Dreams

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)

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