Infra.india Regulatory News (IIP)

Infrastructure India plc

IIP TO INVEST ADDITIONAL £16.5M INTO SHREE MAHESHWAR

Assured 17% IRR

Infrastructure India plc, the infrastructure fund investing directly into assets in India, is pleased to announce that on 1 September 2011, it agreed to invest a further £16.5 million into Shree Maheshwar Hydel Power Corporation Limited ("SMHPCL").

SMHPCL, promoted by Entegra Limited ("Entegra"), is constructing a 400MW hydropower scheme on the Narmada River in the state of Madhya Pradesh. The project is largely complete, with power generation expected to commence later in 2011. IIP made a first investment in the project in 2008, which holding was valued at £21.4 million as at 31 March 2011 and is now making this second investment of £16.5 million in the project. With this additional investment, the Group's aggregate equity interest in SMHPCL will amount to 17.7 per cent. (7.9 per cent. on a fully diluted basis).

The project's returns are protected by way of regulation and a Power Purchase Agreement which provide for a return on equity to investors in the project, while IIP's returns are to be protected by way of an IRR guarantee arrangement on cash flows. The Group expects to earn a minimum IRR of 17 per cent. on this new £16.5 million investment. While the maximum IRR for the Group is not contractually limited, the Group has agreed to share returns above certain thresholds on this second round investment with certain co-investors in SMHPCL. In addition, IIP has negotiated a three year extension in respect of the original guarantee (with a minimum IRR of 15 per cent.) previously provided relating to the Group's initial investment made in 2008. If the guaranteed IRRs are not achieved on the Group's exit, certain shares in SMHPCL will be transferred to the Group.

Commenting on the investment, Tom Tribone, IIP's Chairman said; "This investment into Shree Maheshwar, at a key inflection point in the project's history, has been structured to deliver an attractive return to the Group, and extends the return guarantee mechanism on the initial investment, thereby providing considerable value to the Group's total investment in the business."

Sonny Lulla, IIP's Chief Executive, said; "The Shree Maheshwar project is positioned to be one of India's most important private sector hydropower projects. We are delighted to be able to increase our interest in the project as it is about to commence operations, and to further strengthen our relationship with Entegra."

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