ICICI Bank Ltd, India's second biggest lender, plans to raise as much as US$3 billion for two funds as it competes with Morgan Stanley and Deutsche Bank AG to invest in the world's second-fastest growing major economy.
ICICI Venture Fund Management Ltd will tap investors for a US$1.5-billion private equity fund starting next week, and may raise an equal amount for a real estate fund, Chief Executive Officer Renuka Ramnath told Bloomberg News in Mumbai.
The division currently manages about US$2.5 billion in assets.
ICICI joins Blackstone Group LP and local rivals including Kotak Mahindra Bank Ltd in seeking investment opportunities in India, where private equity funds invested seven times as much as in China in the first quarter. India's economy has grown an average 8.7 percent annually since 2003.
"India's attraction continues to be growth," said Ramnath, 47.
"We want to focus on opportunities in the knowledge sector and domestic consumption-led areas of retail, services, education in the private equity fund."
Equity funds
Private equity funds invested US$4 billion in Indian companies through the quarter ended March, 67 percent more than a year earlier, New Delhi-based advisory firm IndusView Advisors Pvt said last month.
That compared with the 76 percent drop to US$570 million for China, the firm said. Morgan Stanley, the second-biggest US securities firm, last month said it planned to start operating a private equity unit in India this month. Kotak Mahindra, the former partner of Goldman Sachs Group Inc in India, plans to raise about US$1.2 billion for two funds.
The record economic growth and a shortage of homes that led to a four-year rally in property prices helped attract Warburg Pincus LLC and Blackstone, which have bought stakes in Indian real-estate developers in recent months. The world's second-most populous nation will face a deficit of 26.5 million houses by 2012, the government estimates.
Deutsche Bank's RREEF Unit, the world's largest alternative investment manager, plans to invest more than US$1 billion over three years in India's real estate and infrastructure assets.