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Dutch pension fund APG eyes Tata Power’s RE InvIT

The development comes amid renewed interest among investors in India’s green energy space. The country is working on the world’s largest clean energy programme to build 175GW of renewable energy capacity by 2022Premium
The development comes amid renewed interest among investors in India’s green energy space. The country is working on the world’s largest clean energy programme to build 175GW of renewable energy capacity by 2022

  • APG is interested in acquiring 51% stake in Tata Power’s renewable energy InvIT
  • Citibank was given the mandate to find an investor for the InvIT, which includes 3GW RE projects

In what may rank among the largest clean-energy deals in India, Dutch pension fund manager APG Asset Management NV has evinced interest in acquiring a 51% stake in Tata Power’s renewable energy infrastructure investment trust (InvIT), said two people, requesting anonymity.

Citibank was given the mandate to find an investor for the InvIT, which will house 3-giagwatt (GW) of renewable energy projects, besides 10,000 crore- 12,000 crore of debt.

InvITs manage income-generating infrastructure assets, typically offering regular yield to investors and a liquid way to invest in infrastructure projects.

Others expressing interest in the proposed InvIT include private equity firm Actis Llp, Ontario Municipal Employees’ Retirement System (OMERS), Canada Pension Plan investment Board (CPPIB), and Caisse de dépôt et placement du Québec (CDPQ).

The development comes amid renewed interests in India’ green energy space. Adani Green Energy Ltd had recently bagged a manufacturing-linked solar contract from Solar Energy Corp. of India to develop 8 GW of projects, in a transaction valued at 45,000 crore.

“We have very ambitious targets in renewables. For that, we require money and we are looking at bringing in strategic investors," Praveer Sinha, managing director and CEO, Tata Power, had said in an earlier interview.

Experts said foreign pension funds are taking an interest in the domestic green economy as the Indian market has matured and it fits their risk profile. They are also uniquely positioned to invest directly into the infrastructure space drawing from their experience of investing in North America and the Organization for Economic Cooperation and Development countries. Also, the pension funds represent the so-called patient capital, which seeks modest yields over time. While a Citibank spokesperson declined to comment, queries emailed to Tata Power early on Tuesday remained unanswered. APG Asset Management spokesperson declined to comment.

With € 538 billion under management and 4.7 million participants, APG is the biggest pension administrator in the Netherlands and works on behalf of eight pension funds, including ABP (government and education), bpfBOUW (construction), SPW (housing corporations), BPF Schoonmaak (cleaning), PWRI (social/labour inclusion), SPMS (medical specialists), the Pension Fund for Firms of Architects and PPF APG (APG personnel pension fund). CPPIB, OMERS and Actis spokespersons declined to comment. “CDPQ does not comment (on) market rumours," a CDPQ spokesperson said in an emailed response.

India is working on the world’s largest clean energy programme, with an aim to achieve 175 GW of renewable energy capacity by 2022. It has 34.6 GW of solar power and 38GW of wind power.

Even as economic activity came to a standstill during the covid-induced nationwide lockdown, deal activity continues unabated for the green economy. The interest stems from India’s decision to unveil next generation power sector reforms, which include privatization of electricity distribution companies and a new cost-reflective tariff policy.

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