Canada-based pension funds PSP Investments and Ontario Teachers’ Pension Plan (OTPP) are in talks to invest Rs 4,000 crore in an investment platform co-promoted by the government of India-sponsored National Investment and Infrastructure Fund (NIIF), persons directly familiar with the matter said. The funds could invest in a special purpose vehicle (SPV) floated by NIIF to fund toll and annuitybased road projects, they said. The three parties are currently negotiating the structure of the partnership, which could entail the creation of a supervisory board in which the funds will have representation. The board will monitor investments made by the SPV. NIIF may invest a similar amount of money in the SPV to acquire a proportionate equity holding in the investment platform or may rope in other investors at a later stage.
Spokespersons for PSP Investments and Ontario Teachers’ declined to comment in response to ET’s queries. NIIF director Saurabh Garg, who is also a joint secretary in the finance ministry, declined to comment. NIIF CEO Sujoy Bose didn’t respond to queries sent by email. India is looking to boost investment in roads, ports, railways, energy and airports to upgrade its woeful infrastructure as part of efforts to bolster economic growth. The structure of the partnership could mirror a deal struck by Canadian asset manager Caisse de Depot et Placement du Quebec (CDPQ) with EdelweissBSE -1.96 % group for investing in stressed assets in October last year. NIIF was set up 18 months ago as a quasi-sovereign wealth fund. It roped in Bose, former global head of infrastructure investments at International Finance Corporation, as its CEO last year. NIIF’s board comprises Garg, Securities and Exchange Board of India (Sebi) chairman Ajay Tyagi and former economic affairs secretary Shaktikanta Das. he government-sponsored fund is also separately said to be in discussions with Middle East-based sovereign wealth funds to arrange commitments as it looks to put together a corpus of $5 billion to support infrastructure investments in railways, ports and the renewable energy sector.
It may raise the proceeds in an existing fund management company. Ottawa-headquartered PSP or Public Sector Pension Investment Board manages over $100 billion in investments for retired officials of Canada’s public service, armed forces and police. It acquired ownership of four toll road projects in India totalling 710 kilometres in length as part of a global transaction in which it purchased the assets of Spanish infrastructure group Isolux Corsan in five countries last year.
‘LOW-RISK INVESTMENTS’
“Many road projects are financially unviable because traffic projections did not materialise. Longterm investors such as pension funds would still find these attractive because they are looking at low-risk investments and have a 20-year horizon,” said Naresh Takkar, group CEO at Moody’s local rating arm, ICRABSE 0.90 %. OTPP, a Canadian pension fund that manages investments of 182,000 school teachers in Ontario, has deployed roughly a fourth of its corpus of $140 billion in real estate and infrastructure investments globally. It is an investor in London City Airport, the Chicago Skyway toll road and owns a number of retail and commercial properties in Canada. The fund has largely refrained from making direct investments in India, though it is an investor in online commerce firm Snapdeal. The National Highways Authority of India (NHAI), the nodal agency for the award of contracts for road projects, awards long-term concessions to contractors to build and operate projects and recover proceeds through tolls. It also offers annuity-based projects where the developer bears the cost of constructing the project and receives annuity payments from NHAI as reimbursement over a period of time. Canadian investors have been scouting investment opportunities in India. Canada Pension Plan Investment Board struck a deal with Larsen and ToubroBSE 1.37 % to invest Rs 1,000 crore in its road projects arm three years ago.
Source:TheEconomicTimes
