3i Infrastructure, the London-listed company that is part owned by the eponymous British private equity group, has decided to stop investing in India after a period of volatility and poor returns.
The move is another step in the gradual retrenchment of 3i from an emerging market that its former chief executive Michael Queen identified as strategic only a few years ago.
3i Infrastructure is one of the largest investors in a $1.2bn India infrastructure fund that was raised in 2008 and managed by 3i, which is now headed by former Greenhill banker Simon Borrows.
The infrastructure investor had committed $250m to the India fund and overall its Indian exposure represents about 10 per cent of total assets. 3i had committed the same amount to the fund, with the rest coming from third parties.
3i Infrastructure announced its decision to focus on Europe on Thursday, when it released earnings.
“The main negative appears to have been the share price of Adani Power and the weakness of the Indian Rupee against sterling, with the Indian portfolio seeing an unrealised loss of £26.3m,” Iain Scouller, analyst at Oriel Securities, said. “The European portfolio performance was much better, with an unrealised gain of £51m.”
The decision follows the departures of two 3i executives in India – Anil Ahuja, managing partner, and Girish Baliga, partner – in February, two months after the Indian fund’s investment period expired, meaning the team does not have money to invest.
3i has been undergoing an intense restructuring since Mr Borrows took over a year ago. A spokeswoman for the company said it indicated last year that it had suspended plans to raise a new infrastructure fund in India “at present”.
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