In an acknowledgement of India’s potential as an investment destination, Chinese equity hedge fund Silver Spring Capital will soon invest over `2,000 crore ($300 million) in the fund-starved infrastructure sector.
The Hong Kong-based fund will make this investment in Hyderabad-based infrastructure developer Transstroy India Limited.
“This is the first ever proposal where the money will be pumped in the company for construction of highways. Till now foreign funds have shown interest in buying completed projects,” a senior government official said.
One such buyout of completed projects happened last year when Gammon Infrastructure’s sale of six road and three power projects to BIF India Holdings for about Rs 563 crore. BIF Holdings is controlled by Canada-based Brookfield Asset Management.
Meanwhile, Reliance Infrastructure too is understood to be in talks with Singapore wealth fund GIC to sell 11 road projects.
“This transaction (by Silver Spring Capital) is a clear evidence of investors’ enthusiasm in long-term infrastructure projects,” the official said.
At present, the government allows 100% foreign direct investment (FDI) under the automatic route for support services to land transport such as construction and maintenance highway bridges, toll roads, vehicular tunnels and cargo handling, including collection of toll.
Foreign direct investment (FDI) in construction sector (including roads and highways) from April 2000 to December 2015 in India was Rs 1.14 lakh crore (around $24 billion). This amounted to 8.7% of the total FDI inflows in the period, according to data released by Department of Industrial Policy and Promotion (DIPP).
“The proposal is currently subject to government approval and is likely to be cleared soon,” sources said.
Getting FDI in roads and highways sector has been top priority for the government, which feels foreign investment is key to build projects of international standards. Road transport minister Nitin Gadkari has expressed that the country needs FDI in the road infrastructure sector to meet international standards.
Transstroy limited currently has two unfinished projects: a 54-km stretch from Coimbatore to Mettupalayam in Tamil Nadu and a 121-km highway from Obedullaganj to Betul in Madhya Pradesh.