Old Lane, the New York-based, India-focused hedge fund recently bought out by Citigroup, plans to increase its India presence by floating a public asset management company and an infrastructure development company. Apart from the $4-billion hedge fund, Old Lane also has a $500-million India opportunities fund.

Floated by three former Morgan Stanley executives, Old Lane plans to invest capital raised overseas in Indian equities and bonds as global investors are enthused with the world’s second-fastest growing economy that recently crossed the $1-trillion mark, said CEO and co-founder Guru Ramakrishnan.

“Investments in public securities and floating of a separate company for infrastructure development are all steps in line with the large fund requirements for developing India’s infrastructure,” Mr Ramakrishnan told ET.

The $4-billion Old Lane hedge fund shot to limelight in March after Citigroup took it over for an undisclosed sum. The attention on the fund also stemmed from the fact that co-founder Vikram Pandit is widely believed to succeed Citigroup global CEO Chuck Prince. Mr Pandit and Mr Ramakrishnan along with third co-founder, John Havens, are now part of the management committee of Citigroup Alternative Investments, the unit which owns Old Lane. Citigroup Alternative Investments has about $53.7 billion of unlevered assets under management, making the firm one of the world’s largest alternative asset managers.

Although Mr Ramakrishnan didn’t specify how much the stake sale was, “the proceeds have been ploughed in the hedge fund, which will be used to invest in emerging markets and elsewhere,” he said, adding that Old Lane will benefit from the Citi’s wide distribution platform.

The buyout of Old Lane was rumoured to be between $600 million and $800 million. The Old Lane hedge fund is keen to invest in Indian public sector banking industry once the government revises norms on foreign ownership in this sector. “We are also interested in robust companies that have an inherent real estate strength, a value that hasn’t been realised till now,” said Mr Ramakrishnan. He, however, was quick to point out that the fund would be looking at profitable companies only.

Recently there were reports that some foreign funds have been looking at acquiring Indian companies that are performing badly, mainly to cash in on their real estate assets.

Old Lane has a strong India presence through its JV with the Nimesh Kampani-owned JM Financial group for a corporate private equity fund. It also has regional collaborations in real estate — it teamed up with RR group of Chennai to develop a 2- million sq ft IT and ITES park and with HDFC and Sterling group in Bangalore. Old Lane has already invested about 40% of its $500 million India fund. Citigroup Alternative Investments recently created a new investment centre that aims to capitalise on the growing need for infrastructure investment around the world.

Citi Alternative Investments manages a wide range of products including private equity, hedge funds, real estate and structured products, and manages capital on behalf of Citi as well as third-party institutional and high net worth investors.

Source :Economic Times