Investment Strategy

The Company invests predominantly in those infrastructure projects in India which it believes have the potential to generate substantial capital growth and deliver income.

Indian Energy Projects

Investment Policy

Overall focus

The Company will invest at the asset level or through specific holding companies (not by investing in other funds or in the equity of non-specific parent companies) in infrastructure projects in India. Such investments are to be focused on the broader sectors of:

Energy – including assets involved in electricity generation, transmission and distribution; infrastructure assets related to oil and gas, service provision and transmission; renewable fuel production and renewable energy assets; and
Transport – including investment in roads, rail, ports and airport assets, and associated transport interchanges and distribution hubs.

Additionally, the Company may make investments in other economic and social infrastructure sectors within India where opportunities arise and which the Board considers offer similar risk and return characteristics to those found within the energy and transport sectors.

Indian construction project

Sector weighting

The Company will be focused on investing in assets close to the commencement of operations – it will concentrate on making investments in those assets which are in the process of construction and are typically within 30 months of planned commercial operation. In some cases, however, the Company may invest in primary bidding and/or early stage assets (e.g. before the commencement of construction) and, in some cases, existing assets in operation.

Asset allocation

The Company will focus on being a purely equity investor at the SPV level in infrastructure assets in India. The Company may also invest through subordinated debt or mezzanine instruments in some cases.

Risk diversification

The Company will seek geographical diversification within India and diversification within the project types, counterparty, payment mechanisms and co-investment partners.

Gearing

The Company’s level of gearing will be limited to no more than 50 per cent. of its net asset value (NAV). Gearing at the nonrecourse SPV level will typically be at a debt/equity ratio of 70/30.
The Board will seek to increase gearing at the project level when appropriate but will seek to ensure, as far as possible, that gearing at the nonrecourse SPV level does not exceed 90 per cent. of total capital.

Maximum exposures

The Company anticipates that single investments will typically represent no more than 30 per cent. of the Group’s NAV (as measured at the time of investment). Should the maximum exposure be reached, the Group will seek to ensure that the remainder of the Group’s investments are spread across different asset classes in different geographies (within the definition of the Group’s overall focus) to ensure risk diversification.

Subject to this, there will be no minimum or maximum stakes that the Company can have in projects although its target size of equity investment in any one single entity project is likely to be between £10 million and £40 million. The Board may undertake investments outside of these parameters at their discretion but in consultation with Shareholders.

Investment Restrictions

The Company must, insofar as it is possible, invest and manage its assets in a way which is consistent with its objective of spreading investment risk and in accordance with the overall investing policy. In addition, no more than 10 per cent., in aggregate, of the value of the total assets of the Company at the time an investment is made, may be invested in other listed closed-ended investment funds. The Board does not anticipate any circumstances in which the Company’s investment restrictions will be breached, but were this to occur, the actions to be taken would be communicated to Shareholders by an announcement through an RIS.