NDTV.com – Global money managers are stepping up efforts to profit from Asia’s infrastructure boom, lured by the prospect of billions in spending on everything from new roads and ports to railwaysand power grids.
From mutual funds aimed at average investors to private equity vehicles powered by pension fund cash, the industry is fighting to capitalise on a trend it sees lasting years.
Regional heavyweights China and India are top targets for such investment as economic growth of nearly 10 percent a year trumps concerns about the risks involved.
“When you look at the state of Indian infrastructure, it requires significant improvement, whether it is the airports, or the ports, or the roads, or the electricity supply,” said Krishan Sehgal,head of Asian infrastructure investment for AMP Capital Investors.
“The infrastructure related industries and businesses are growing even faster than the GDP growth, so for an investor India is an attractive opportunity.”
The firm, a unit of Australia’s AMP Ltd., announced the closing in January of its $102 million Infrastructure Fund of India, a private equity vehicle backed by Australian and Asian institutionalinvestors. It was AMP’s second such fund in a decade.
A 2005 study co-sponsored by the World Bank estimated that East Asia needs to spend $1 trillion on infrastructure over five years to meet the needs of rapidly expanding cities, rising populations androbust demand from growing businesses.
Investment by fund managers to date has played a minor role compared with bank financing, said John Bailey, managing director of Asian corporate and infrastructure ratings for Standard &Poor’s.
