Edelweiss group targets $1 billion corpus for infrastructure fund

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Mumbai: The Edelweiss group is raising its first infrastructure fund, targeting a corpus of at least $1 billion, its largest alternative asset fund till date, said three people aware of the development.

The group, through its various entities, manages several alternative investment funds such as credit funds, real estate funds and a distressed assets fund.

“Edelweiss plans to raise its first infrastructure fund and is targeting to raise at least $1 billion for it. The group has initiated preliminary discussions with investors and is currently also busy with setting up the team to manage the platform,” said one of the two people cited above, requesting anonymity as he is not authorized to speak with the media.

Edelweiss will start full-fledged marketing road shows for the fund raise by the end of December or early January, he said, adding that it expects to have the investment team in place by December.

“The firm will target a first close of around $300-400 million and a final close of at least a billion dollars. Funds will be raised from both domestic and overseas institutional investors and to a small extent from high net-worth individuals,” the first person said.

According to the second person cited above, the fund will look at owning only operating assets in three sectors—roads, transmission and renewable energy. He too requested anonymity.

“One of the ways they will look at exiting these assets is through the InvIT (infrastructure investment trust) route, which will also result in providing enhanced yields to investors. In India as well as across the globe, investors are looking for higher yield generating opportunities and hence, there is a strong demand for platforms like these,” he added.

InvITs are trusts that manage income-generating infrastructure assets, typically offering investors regular yield and a liquid method of investing in infrastructure projects.

An email sent to Edelweiss group on Tuesday evening was not answered till press time.

The proposed Edelweiss infrastructure fund will be just the third major infrastructure-focused fund to be raised by a domestic institution in India in the last several years.

In September 2016, Tata Power Co. Ltd partnered with ICICI Venture Funds Management Co. Ltd to create a platform company to invest up to $850 million in power projects in India over two-three years.

Earlier in 2014, IDFC Alternatives Ltd, the private equity arm of IDFC Ltd, raised its second infrastructure fund, India Infrastructure Fund II, with a corpus of $900 million. Other infrastructure-focused funds active in India include global infrastructure fund I Squared Capital, founded by former Morgan Stanley senior executives and Australia’s Macquarie Infrastructure and Real Assets (MIRA).

In August, Reuters reported that I Squared Capital is raising its second infrastructure fund of up to $6.5 billion. I Squared’s investments in India include roads platform Cube Highways and Infrastructure and distributed renewable energy company Amplus Energy Solutions.

Last year, MIRA, part of the asset management arm of Macquarie Group, raised $3.1 billion to invest in infrastructure companies in Asia, including India.

In September, The Economic Times reported that Morgan Stanley is set to make a first close of $400-500 million for its maiden $1-billion India-dedicated infrastructure fund.

Other Edelweiss funds include a $350 million credit-focused fund Edelweiss Special Opportunities Fund (ESOF) II, its second such fund, which achieved its final close in April and a real estate fund.

Edelweiss in 2016 tied up with Caisse de Dépôt et Placement du Québec (CDPQ), the second-largest pension fund in Canada, to invest approximately $750 million in stressed assets and specialized corporate credit in India.