November 20, 2024: Alpha Alternatives and Dilip Buildcon have solidified a transformative $450 million (Rs 3,800 crore) partnership, marking the first close of the Alpha Alternatives Build India Infrastructure Fund.
This ambitious initiative aims to revolutionize India’s road infrastructure by investing in a wide range of projects, from standard and distressed to under-construction and operational assets. With a strategic focus on driving economic growth and improving connectivity, the fund represents a significant step toward reshaping the nation’s infrastructure landscape.
The fund targets a total corpus of $750 million over a five-year period, extendable up to seven years. It is backed by a unique collaboration with Dilip Buildcon, one of India’s leading infrastructure construction companies, which brings operational expertise to the partnership. Furthermore, Alpha Alternatives plans to establish an Infrastructure Investment Trust (InvIT) in 2025 to facilitate a smooth exit for investors.
According to Jignesh Shah, partner and head of infrastructure at multi-asset class asset management firm, the fund offers an unparalleled entry point for investors, allowing them to invest in projects at a critical stage before these assets transition into InvITs. “The depth of our transaction sourcing capabilities, combined with our differentiated investing approach, positions us to tap into a wide array of opportunities in the road sector,” Shah remarked.
Naresh Kothari, founder and managing partner of Alpha Alternatives, emphasized the transformative vision behind this initiative. “We are reimagining the way investors approach real assets investing in India by challenging traditional expectations of limited returns associated with high-quality assets. Our focus on high-quality road assets, the backbone of economic growth, is set to deliver better risk-adjusted returns,” he stated.
Alpha Alternatives Build India Infrastructure Fund : Impact on India’s Infrastructure Ecosystem
Alpha Alternatives‘ latest fund signals a strategic shift in how institutional investors view infrastructure investments in India. Unlike conventional approaches, which often yield lower returns, the fund’s investment model is designed to optimize returns while mitigating risks through a well-structured partnership with an experienced construction giant, Dilip Buildcon. This collaboration ensures that projects receive operational oversight and execution expertise, accelerating their timeline to profitability.
The Alpha Alternatives Build India Infrastructure Fund will primarily focus on roads, a sector crucial for India’s economic development. With a robust pipeline of road projects and the government’s ongoing emphasis on infrastructure, this investment is well-timed.
However, experts note that executing on-the-ground projects effectively will be key, especially when dealing with distressed or under-construction assets that pose inherent risks.
Outcomes and Long-Term Benefits
- Economic Boost: The fund’s emphasis on developing road networks will enhance connectivity across regions, potentially driving economic growth by improving trade and transport efficiencies.
- Job Creation: Large-scale infrastructure projects are labor-intensive and could generate significant employment opportunities, contributing to the socio-economic upliftment of communities.
- Investor Returns: With a strategic exit route via the upcoming InvIT, the fund seeks to offer competitive, risk-adjusted returns, providing investors with an opportunity to gain from India’s infrastructure boom.
- Market Confidence: By securing $450 million in its first close, multi-asset class asset management firmhas demonstrated strong investor confidence, setting the stage for similar future investments.
Addressing Core Challenges
Kaushal Biyani, partner and head of illiquid alternatives at Alpha Alternatives, highlighted the fund’s focus on mitigating the challenges of holding long-term depreciating assets. “AABIIF aims to leverage strategic opportunities in road infrastructure while addressing depreciation risks inherent in illiquid assets,” Biyani stated. In just 18 months, the company has successfully raised over $1.25 billion across its illiquid alternative strategies, reflecting a growing appetite for this asset class.
A Positive Ripple Effect
Beyond economic growth, the multi-asset class asset management firm fund is expected to enhance regional integration and improve the quality of life for millions by making road travel safer and more efficient. The venture’s success will also serve as a benchmark for how public-private partnerships can unlock significant value in infrastructure investments.
As India continues its push towards a $5 trillion economy, funds like AABIIF represent critical cogs in the machinery driving this transformation. The focus now will be on timely project execution and the seamless integration of investor returns with infrastructural progress.
