Overview

India's infrastructure market continues to attract international interest. In 2009, India topped global project finance league tables with US$30bn of deals transacted in the country according to figures released by
Reuters Project Finance International and Thomson Reuters SDC1. Infrastructure development in India is estimated to require US$1.7tr over the next decade. The Eleventh Five-Year Plan contemplates more than US$500bn of investment in infrastructure by 2012. Public private partnerships are projected to account for nearly 30 per cent of the proposed investment.

Much of the foreign investment in infrastructure has been by way of equity. The roads sector has attracted
several international construction companies, such as Atlantia of Italy, Isolux Corsan of Spain and John Laing of the UK. All four airport PPPs that have achieved financial closure to date have similarly benefited from foreign equity participation4; foreign sponsors and venture capitalists are also showing interest in India's burgeoning power sector. Morgan Stanley, Goldman Sachs, General Atlantic, Everstone Capital and Norwest Venture Partners have invested US$425m into Asian Genco, an infrastructure company that invests in Indian power generation, and Singapore's Sembcorp recently concluded a joint venture agreement with an Indian infrastructure company to set up a 1,320 MW power plant at Krishnapatnam in the state of Andhra Pradesh.

Project financing structures in India are generally nodifferent to those prevalent internationally. Foreign
sponsors may enter into joint venture agreementswith an Indian partner to form the special purpose vehicle (SPV) which executes the project. The SPV may then enter into a concession agreement with an Indian government entity, construction and operating agreements with various contractors, and financing agreements with lenders. However, lending practices among Indian lenders can differ significantly from those in the international project finance market.