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By Jason Simpkins
Shares of GMR Infrastructure Ltd. rose in Mumbai yesterday (Thursday), after the company sold $1 billion of stock to 49 investors – including billionaire investor George Soros, U.S. banking giant Citigroup Inc. (C), and mutual-fund manager T. Rowe Price Group Inc. (TROW).
GMR is one of the world's fastest-growing infrastructure companies. In addition to operating the New Delhi and Hyderabad airports, the company manages the production of roads and energy.
"Some big investors have been attracted by the company's growth and the large numbers of orders it may win," R.K. Gupta of New Delhi-based Credit Capital Asset Management Ltd., who owns 81,000 GMR shares, told Bloomberg News. "The play is on infrastructure."
The sale will make it possible for Soros, Citigroup and others to profit from a supposed $500 billion infrastructure investment by the Indian government. India's Prime Minister Manmohan Singh wants to increase competition with China, which invests about $150 billion in public works projects each year.
India's infrastructure is notoriously substandard and has been a drag on an economy bursting at the seams. It must be improved if the nation is going reach the goal of growing at a 10% annual rate by 2012.
GMR plans to use proceeds from the sale to increase its power-generating capacity to 3,500 megawatts – more than four times its current level. The company will also build an airport in Istanbul. GMR is also looking into potential mining opportunities in Indonesia and South Africa.
The company's most ambitious project, however, will be the establishment of a special economic trade zone in Tamil Nadu – the third-largest state in India, and the second-most industrialized. The total cost of the project is estimated to be $3 billion.
News and Related Story Links:
- Money Morning:
Infrastructure a Smart Bet in 2008
- Money Morning:
Why India Is Losing the Race with China – and What It Can Do to Gain Ground.