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Ontario Teachers joins Canadian pension funds’ quest for Indian green energy investments

Ontario Teachers joins Canadian pension funds’ quest for Indian green energy investments

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  • This marks the pension fund joining the marquee names such as CPPIB and CDPQ
  • This comes in the backdrop of Canadian pension funds being uniquely positioned to invest directly into the infrastructure space

NEW DELHI: Ontario Teachers’ Pension Plan (Ontario Teachers), one of Canada’s largest single-profession pension plans, is actively scouting for investment opportunities in India’s green energy and airport space, said two people aware of the development.

This marks the pension fund joining marquee names such as Canada Pension Plan Investment Board (CPPIB), Caisse de dépôt et placement du Québec (CDPQ), Public Sector Pension Investment Board and Ontario Municipal Employees’ Retirement System (OMERS) in investing in India’s clean energy economy as the sector has emerged as a global investment hot-spot.

Earlier this month, Ontario Teachers along with AustralianSuper, Australia’s largest superannuation and pension fund, made a $2 billion commitment in National Investment and Infrastructure Fund Ltd (NIIF) These include commitments of $250 million each into NIIF’s master fund, and co-investment rights of up to $750 million each in future opportunities alongside the master fund.

In response to specific queries from Mint, a spokesperson for Ontario Teachers in an emailed statement said, “We will not be commenting on any individual investment opportunities in India at this time.”

This comes in the backdrop of Canadian pension funds being uniquely positioned to invest directly in the infrastructure space, given the expertise built by them over a period of time by investing in North America and the Organisation for Economic Co-operation and Development (OECD) countries. In comparison, US-based pension funds invest in private equity which then invest in target companies.

“We are very pleased to be investing in the NIIF, which represents our first investment in Asian infrastructure. As the world’s sixth-largest economy and with one of the fastest global growth rates, we believe that India represents a key market for Ontario Teachers’ global strategy. It has an active infrastructure market that we believe will provide significant opportunities to diversify our global portfolio,” added Ben Chan, regional managing director, Asia Pacific, Ontario Teachers’ Pension Plan, in the emailed statement.

With over $3 billion of capital commitments across three funds—‘master fund’, ‘fund of funds’ and ‘strategic fund’, the NIIF looks to invest in operating assets, greenfield projects and anchor third-party managed funds in core infrastructure and related segments.

“The NIIF is an ideal partner for Ontario Teachers. We are strongly aligned through our shared focus on patient, long-term investing. A key component of our strategy is working with experienced partners like the NIIF, whose deep local knowledge and relationships complement our successful 18-year track record of direct infrastructure investing,” said Dale Burgess, senior managing director, infrastructure and natural resources, Ontario Teachers’ Pension Plan, in the emailed statement.

These Canadian pension funds also represent the so-called patient capital, which seeks modest yields over time. India fits the risk profile given that the markets here have matured from the early risk stage. Also, India’s green energy tariffs have hit a record low, making access to cheap funds a key criterion for success.

There has also been a convergence of interests given the growing investment needs of India’s emerging green economy. The sector is expected to require investments of around $80 billion till 2022, growing more than three-fold to $250 billion over 2023-30. Investments in India’s renewable energy sector doubled over the last five years to around $20 billion in 2018, surpassing capital expenditure in the thermal power sector, according to a IEA-CEEW joint study.

Source: livemint
Anand Gupta Editor - EQ Int'l Media Network