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Edelweiss Infra Fund to raise $375m; plans invIT for road, energy assets

Edelweiss Infra has launched the road show for fundraising for its infrastructure fund Edelweiss Infrastructure Yield Plus Fund, and is likely to close the fund at $750 million by early next year

, ET Bureau|
Nov 08, 2019, 11.26 AM IST
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Agencies
Edelweiss
MUMBAI: Edelweiss Alternative Asset Advisors has begun the second phase of fundraising for its infrastructure fund Edelweiss Infrastructure Yield Plus Fund, and is likely to close the fund at $750 million by early next year.

Edelweiss Infra has launched the road show and is in discussions with global pension funds, insurance companies and endowment funds to raise about $375 million (Rs. 2,600 crore) to invest in raods and energy assets in India.

Edelweiss had marked the first close of the fund in May, raising $375 million and is likely to deploy the fund before December 2019.

The assets are acquired through two new platforms — Sekura Energy and Sekura Roads backed by Edelweiss Infrastructure Yield Plus fund (EIYP).

Sekura Energy had acquired two operating power transmission assets from Essel Infraprojects — namely Darbhanga-Motihari Transmission and NRSS XXXI (B) Transmission last month. The stake in the two other under construction assets would be acquired post commissioning. The total enterprise value of the energy assets would be about $750 million.

In June, Sekura Roads had acquired two annuity road assets from Hyderabad-based Navayuga Group for an enterprise value of $150 million.

“Buying and aggregating goodquality operating assets is a viable long-term opportunity to not only generate reasonable risk-adjusted returns for our clients but also to contribute to the infrastructure development of India,” said Subahoo Chordia, Head of Edelweiss Infrastructure Yield+ Fund.

“There are many global funds which does not have presence in India. Such global funds and domestic investors look for a professionally managed independent platform through which they can participate as a long term opportunity,” he added.

Edelweiss Infra also plans separate Infrastructure trusts or InvITs, for roads and energy platforms in next couple of years.

Emergence of infrastructure assets in India as an investment class for cash flow yield is turning to be a popular trend.

Both global and domestic investors are looking to invest in good-quality operating infrastructure assets for long-term cash flow based returns. One of the challenges for them is to find an independent and a professionally managed platform which brings alignment.

“Emergence of independent Infrastructure funds or InvITs will be critical to channelize this large pool of capital to buyout operating infrastructure yielding assets and support India in meeting its infrastructure development needs,” said Subahoo.

India requires an investment of around Rs. 50 lakh crore for infrastructure development over the next 5 years, according to estimates.

InvITs of long-term revenue generating assets like toll roads and power-transmission projects are becoming popular among longterm investors or pension funds.

"InvITs should gain popularity with retail investors considering they have a capability of delivering more than 10% (post tax) annualized liquid return to investors, especially when the equity market is likely to continue with it’s 8-10% annualized return (pre-tax), as has delivered in the last 5 years," said Vishal Seth, Managing Director, Financial Reporting and Transaction Advisory, Protiviti India.

Currently, there are two listed InvITs — IRB InvIT Fund (by IRB Infrastructure Developers), IndiGrid InvIT Fund (Sterlite Power Grid Ventures) and two private InvITS — IndInfravit, sponsored by L & T Infrastructure Development Projects and Brookfield-led India Infrastructure investment trust.

Infrastructure investment trust (InvIT) issuances to grow five-fold to over Rs. 2 lakh crore in the next two years, said a July 2019 CRISIL report.
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