Within India, there is an ever-increasing need for regional infrastructure investment amid urbanization and a growing population. In July 2014, when the budget speech made by the newly-elected Modi government unveiled a renewal of focus on India’s infrastructure, there was a generally positive mood among global investors. In addition to the government’s intention to spend an estimated INR 5.7tn on infrastructure in the coming fiscal year, it has placed an emphasis on greater participation from private players by actively promoting PPP/PFI through initiatives such as Infrastructure Investment Trusts (InvITs), similar to REITs structure, and 3P India. In particular, the government has sought to address the need for road investment through a plan to invest INR 380bn in roads and state highways. Other infrastructure sectors like sea ports, inland waterways, airports, energy and renewable energy have also been highlighted.
Preqin’s Infrastructure Online currently covers 85 institutional investors worldwide with an interest in South Asia-based infrastructure, within which India is the main market. A look at investor types sees banks making up the majority (22%) of the investor pool, followed by insurance companies (16%) and corporate investors (12%).
This group of investors is well-placed to meet the demands of the aforementioned sectors as they are already aligned with existing investment preferences (see chart below). The energy sector (91%) tops the list of industries these 85 global institutions have a preference for, followed by utilities (80%), seaports (72%) and roads (70%). Newly-proposed initiatives, on the other hand, could potentially see aviation (54%), renewable energy (54%) and railway (53%) pique investors’ interest in the near future.