Private Equity Investment in Infrastructure:
Evidence from India

Abstract

There has been rapid growth in private equity (PE) investment in infrastructure over the last decade. This article is an analysis of PE funding in infrastructure based on data from Indian projects. Data from 335 infrastructure projects with PE investment and 370 projects with no PE investment have been used in the analysis. The average investment in projects made by foreign PE investors was higher than that of domestic PE investors. The average investment made by a mix of domestic and foreign investors was significantly higher than the average investment sizes of a group of either the domestic or foreign investors, suggesting that the presence of domestic investors increased the comfort level for foreign investors to enter the market. The main motivation for syndication was to pool capital from different investors. The overall characteristics of the operating environment also play an important role in attracting PE investment. States that had higher values of PPP and Property Right Indices and lower corruption levels attracted PE investment in more projects. Comparing the state level characteristics of projects with and without PE investment showed that PE investors are prepared to invest in riskier environments than other investors.

TOPICS: Private equity, emerging, other real assets, statistical methods