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Macquarie, SBI plan core fund

Concerns of a slowdown in India amid a high inflationary scenario has failed to dry up the flow of investments into the country's infrastructure sector.

business Updated: Apr 16, 2008 20:51 IST

Concerns of a slowdown in India amid a high inflationary scenario has failed to dry up the flow of investments into the country's infrastructure sector.

On Wednesday, global bank Macquarie and the State Bank of India said they would raise and manage a Rs 8,000-crore fund that will invest directly in Indian infrastructure. The move comes at a time when most analysts expect a stiff interest rate regime and a record-high rate of inflation to slacken the pace at which infrastructure projects are completed.

Signing a memorandum of understanding on Wednesday, the banks said International Finance Corporation (IFC) was one of the cornerstone investors in the fund and would also have a stake in the proposed fund management company.

Macquarie, SBI and IFC will together sweep up Rs 1,800 crore to anchor the fund that is expected to be launched by the end of September 2008, and will raise further capital from domestic as well as international institutional investors.

“Teaming Macquarie and its global experience with SBI in its home market, where its reputation and credentials are beyond compare, will create a powerful partnership in India,” Nick van Gelderm, head of Macquarie Capital Funds in Asia, said in a release here.

Gelder, however, felt the rapidly growing population of the country offered a good potential to the infrastructure segment. India's population is expected to grow to almost 170 crore by 2050.

“Some 70 per cent of the Indian population is expected to fall within the working age bracket by 2025 and with disposable income increasing across India, we anticipate a relentless demand for infrastructure in the coming decades,” Gelder said.