2 min read.Updated: 23 Feb 2019, 01:52 AM ISTM. Sriram
OMERS picks up 22.4% stake in IndInfravit Trust, an InvIT, marking its first infrastructure deal in India
IndInfravit Trust holds a portfolio of five operational toll road concessions that were built and operated by L&T IDPL
Mumbai: Canadian pension fund Ontario Municipal Employees’ Retirement System (OMERS) on Friday announced an investment of $121 million for a 22.4% stake in IndInfravit Trust, an infrastructure investment trust (InvIT), marking its first infrastructure deal in India.
IndInfravit holds a portfolio of five operational toll road concessions that were initially built and operated by L&T Infrastructure Development Projects Ltd (L&T IDPL), a subsidiary of construction major Larsen and Toubro Ltd. L&T IDPL is focused on developing infrastructure projects with a focus on roads and electricity transmission.
“IndInfravit is a well-managed, world-class core infrastructure asset. This investment provides an attractive entry point into India, one of the most dynamic markets globally, alongside well-trusted partners," said Bruce Crane, managing director, who leads the efforts for OMERS Infrastructure in Asia.
The other anchor investors in IndInfravit include Canada Pension Plan Investment Board (CPPIB) and Allianz Capital Partners (ACP).
Mint reported on 9 May 2018 that the L&T unit had received commitments from the Canada Pension Plan Investment Board and ACP for its InvIt.
While the Canada Pension Plan Investment Board invested $200 million for 30% of IndInfravit units, ACP has acquired 25% of the units $166 million.
L&T IDPL held 15% of the units. The remainder of the units had been subscribed by several local and international institutional investors.
“Our investment in IndInfravit aligns with our strategy to diversify our portfolio and generate value for OMERS plan members. At the same time, we will participate in the expansion of the Indian economy by investing in crucial infrastructure," said Ralph Berg, executive vice-president and global head of OMERS Infrastructure.
Infrastructure investment trusts, or InvITs, allow infrastructure companies to raise money from investors by operational and revenue generating assets under one umbrella. This allows the companies to fulfil their debt obligations, given the long gestation period of infrastructure projects.
It works like a mutual fund, where investors pool money into the InvIT, a part of which is distributed to the investors later as dividend.
The international infrastructure projects that OMERS has invested in include the London City airport, nuclear power station Bruce Power—Canada’s private nuclear generator—in Ontario, and the port of Melbourne in Australia.
The fund has net assets of more than $71 billion under management and its portfolio includes large-scale infrastructure assets in sectors such as energy, transportation, and government-regulated services.
It has employees in Toronto and other major cities across North America, the UK, Europe, Asia, and Australia.
Canadian investors such as OMERS, CPPIB and Brookfield have been prominent investors in India over the past few years.
Canadian funds have been making a slew of investments in real estate and private equity, both directly and as limited partners to funds, in the country.
Brookfield’s prominent residential deals in India include a ₹450-crore structured debt investment in Mumbai-based Peninsula Land Ltd’s premium project in Byculla.
It has also invested ₹800 crore in Total Environment Building Systems Pvt. Ltd’s housing projects in Bengaluru, as well as $100 million in Hyderabad’s real estate company INCOR.
Canada Pension Plan Investment Board has invested in education startup company Byju’s and Bengaluru’s Phoenix Market City, among others.
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