Australia’s sovereign wealth fund looks at Indian infrastructure investments
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New Delhi: The A$127 billion (Rs6.4 trillion) Australian Government Future Fund is looking to invest in the Indian infrastructure space, including roads, telecommunications and clean energy.
The sovereign wealth fund’s interest in Indian infrastructure projects precedes an expected visit by Australian prime minister Malcolm Turnbull next month.
“The Future Fund is scouting for investment opportunity in the Indian infrastructure space,” said a person aware of the development, requesting anonymity. A second person confirmed the fund’s interest in Indian infrastructure.
With around 7.4% of the Future Fund deployed in emerging markets, it generated a 7.8% return in 2016. Set up in 2006, Future Fund also manages the DisabilityCare Australia Fund, the Medical Research Future Fund and two nation-building funds.
A Future Fund spokesperson said in an emailed response: “The Future Fund is Australia’s sovereign wealth fund, investing for the benefit of future generations of Australians. We work with our investment managers across the globe to identify opportunities that we believe offer the best risk-adjusted returns to achieve our investment mandate. However, we do not comment on current or prospective individual investment transactions.”
Queries emailed to the Australian high commission in New Delhi on Wednesday evening remained unanswered.
Finance minister Arun Jaitley visited Australia last year and pitched for investments from sovereign wealth funds in the National Investment and Infrastructure Fund and pension and insurance funds in India.
Sovereign wealth funds have been active in India and are sought after by green energy firms as they offer so-called patient capital, which seeks modest returns over time. These funds include Investment Corporation of Dubai, Singapore’s GIC Pte Ltd, Abu Dhabi Investment Authority and Abu Dhabi’s Mubadala Development Co.
The possibility of Australian funds investing in India was discussed at a bilateral meeting between Jaitley and Australian treasurer Scott Morrison in Sydney in March last year.
“India has a very large market of operational and under-construction PPP (public private partnership) projects. These will be attractive to institutional investors. Addressing financial stress remains a prerequisite to converting interest into large investments,” said Manish Agarwal, partner and leader, infrastructure, at consulting firm PricewaterhouseCoopers Pvt. Ltd.
The Indian infrastructure sector has an estimated capacity to absorb $1 trillion. India plans to invest almost Rs4 trillion in the next financial year in creating and upgrading infrastructure.
According to a report last year by investment bank Ambit Corporate Finance and the City of London, global pension funds and sovereign wealth funds may invest up to $50 billion in India’s infrastructure sector over the next five years.