At a time when private equity funds are struggling to scoop up new funds, political diplomacy is giving birth to new bilateral funds. The latest to join the league is Indo-Oman joint investment fund formed by SBI and the government of the Gulf state of Oman. The fund's initial corpus is pegged at $100 million which can be expanded to $1.5 billion over the next few years.
SBI and the Sultanate of Oman have signed a MoU for forming the fund last Saturday. It coincides with the Indian prime minister Manmohan Singh's visit to Oman.
The fund in which both SBI and Oman government will put in equal amount of equity, will seek to invest in infrastructure, tourism, health, telecom, utility & urban infrastructure besides other sectors as may be mutually agreed upon by the two partners.
As per terms of the MoU, the two parties can also invite other entities to participate in the fund. Besides providing the window of enlarging the size of the fund to a maximum of $ 1.5 billion, the MoU also states that this could be raised as long term debt and equity capital in several tranches over the next few years.
A special committee would be set up to expedite the investment proposals between the two countries. Deputy chairman of the Planning Commission Montek Singh Ahluwalia will head the Indian side of this special committee.