Infrastructure fund I Squared Capital to form credit business in India

India
Hyderabad, India. Photo by arihant daga on Unsplash

I Squared Capital, which had recently closed a $7-billion global infrastructure fund, is in the process of setting up its credit business in India, said two people aware of the development.

So far, the infrastructure investor had only focused on equity investments in roads and distributed renewable energy generation.

“I Squared Capital is in the process of setting up a credit business in India. They are looking at a comprehensive approach and will be setting up an NBFC (non-banking financial company) and an AIF (alternative investment fund), which will allow it to tap the debt market here through various products, including structured credit and special situations lending”, one of the two people cited above said, requesting anonymity as the talks are private. “The infra investor is also looking at setting up an ARC, which will allow it to tap the distressed credit business also.”

According to the second person cited above, I Squared is likely to invest over $1 billion from the new fund into India and credit will form a significant part of the strategy and investments. He, too, requested anonymity.

Email queries to Gautam Bhandari, a partner at I Squared Capital and Harsh Agrawal, managing director and India head of I Squared Capital, did not elicit any response till press time.

Founded in 2012 by former Morgan Stanley executives, I Squared Capital is an independent global infrastructure investment manager, which focuses on energy, utilities and transport in North America, Europe and some high-growth economies such as India. The firm has offices in New York, Houston, London, New Delhi, Hong Kong and Singapore.

In April 2015, it had announced the final close of its first infrastructure fund, ISQ Global Infrastructure Fund, at $3 billion.

With its plans to set up a credit business in India, I Squared will join the likes of AION Capital and Piramal, which are major players in the infrastructure and special situations lending space.

Piramal, through its lending business, has financed several companies. It had lent Rs 700 crore ($97.2 million) to ACME Solar Holdings Ltd in June 2017. Essel Infrastructure Ltd’s solar platform had raised Rs 900 crore ($124.99 million) from Piramal and its Dutch pension fund partner. Piramal had also provided $100 million in structured financing to renewable energy company ReNew Power Ventures Pvt. Ltd.

Last month, Mint reported that GMR Airports Ltd is in talks to raise $500 million from special situations fund AION Capital Management Ltd to buy out some of the investors in the country’s largest private airport operator.

The proposed investment by AION will be a structured transaction with a mix of debt and equity.

In India, I Squared Capital has so far set up two platforms, Cube Highways, which is a roads and highways platform, and Amplus Energy Solutions, which builds rooftop solar projects. Cube Highways was set up along with International Finance Corp. (IFC). The platform currently owns and operates over 1,700 lane-km of highways across a diverse portfolio of toll and annuity-based roads, as of December 2017.

Last December, a Mitsubishi Corp.-led consortium had acquired a 20-per-cent stake in Cube Highways. In November 2017, Cube Highways had sold a minority stake to sovereign wealth fund Abu Dhabi Investment Authority.

Also read:

Infrastructure-focused I Squared Capital raises $7b for second vehicle, exceeds target

AION Capital targets $1b corpus for new India-focused fund

This article was first published on livemint.com