Michael Queen, managing partner of 3i’s infrastructure business, views India and the US as top destinations for infrastructure investment worldwide, though the opportunities will differ in timing and return expectations.
“Over the next three years, India will offer fantastic opportunities and be the best market to invest in. Beyond those three years, the US will be the best market to invest in,” Queen made the remarks during a pre-conference call with PEO in preparation for PEI’s Infrastructure Investor Forum in New York on 22-23 October.
Queen cited India’s high demand for new infrastructure, which is currently underdeveloped, favourable regulatory framework and “incredibly developed stock market”, as factors behind some of the most robust returns on infrastructure investments available worldwide.
“Some of the [infrastructure] deals we’ve done now [in India] look like they will have extremely strong returns, in excess of returns even on our private equity investments,” Queen said.
Over the next three years, India will offer fantastic opportunities and be the best market to invest in.
3i Infrastructure, which he advises, targets a net annual return of 12 percent to its investors.
However, once infrastructure investment in the US gets moving again, Queen believes that the US will be the top destination for infrastructure investors. The “sheer scale” of the investment needed and the lack of federal and state funds for it will be key drivers of the opportunity, even if returns won't be as promising as in India.
FTSE-100 listed private equity firm 3i Group has had a presence in India since 2005. Earlier this year, it raised a $1.2 billion India Infrastructure Fund, in which both 3i Infrastructure and 3i Group are invested at $250 million each.
3i recently ramped up its North American infrastructure efforts by hiring Bob Stefanowski, a 14-year General Electric corporate finance veteran, to lead its growth capital and infrastructure investment.