Canada Pension Plan, Shapoorji Pallonji tie up for real estate investments in India

CPPIB will own 80% of the venture with an initial equity commitment of $200 million


A file photo of Shapoor P. Mistry, chairman of the Shapoorji Pallonji Group. Photo: Indranil Bhoumik/Mint
A file photo of Shapoor P. Mistry, chairman of the Shapoorji Pallonji Group. Photo: Indranil Bhoumik/Mint

Mumbai: Canada Pension Plan Investment Board (CPPIB) and real estate developer Shapoorji Pallonji Group on Thursday announced an alliance to acquire foreign direct investment (FDI)-compliant office buildings in large Indian cities.

CPPIB will own 80% of the venture with an initial equity commitment of $200 million, said a statement released by the partners.

The venture will target FDI-compliant office buildings that are leased out and offer good scope for returns from asset management. It will be supported locally by the Shapoorji Pallonji Investment Advisors team led by Rajesh Agarwal.

CPPIB was advised by Vikram Gandhi, founder of VSG Capital Advisors.

“We are delighted to be partnering with Shapoorji Pallonji to launch our first real estate venture in India focusing on stabilized office properties in major urban centres,” said Mark Wiseman, president and chief executive officer, CPPIB.

“India is a key growth market for CPPIB and, as a long-term investor, we believe there are attractive investment opportunities across various sectors. We look forward to working alongside Shapoorji Pallonji, a well-aligned and experienced operator and developer in India,” Wiseman said.

Investment bankers say pension funds can make up for a shortage of fund raising avenues to companies at a time when the initial public offering (IPO) market is largely comatose and equity and currency markets volatile in the face of subdued economic growth.

In a recent interview with Mint, Kaku Nakhate, the India head of Bank of America Merrill Lynch said, “The capital market should be developed in order to lure different pockets of finance. For instance, pension funds from world over should be able to come in.” Nakhate said pension funds can provide long-term finance as well.

On 21 October, Mint had reported that Canadian pension funds had expressed keen interest in investing in the proposed infrastructure trust funds modelled on the real estate investment trusts (REITs) in Singapore to open a new refinancing facility for India’s fund-starved infrastructure sector.

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