Mumbai: Piramal Enterprises Ltd on Tuesday said it has signed an agreement with Canada’s largest pension fund manager, Canada Pension Plan Investment Board (CPPIB), to co-sponsor India’s first renewable energy-focused infrastructure investment trust (InvIT).
Mint first reported the development on 2 April.
The proposed InvIT will have an initial targeted corpus of up to $600 million with an option to scale up further, Piramal said in a regulatory filing. CPPIB and Piramal will initially allocate $360 million and $90 million, respectively, to the corpus.
The InvIT would seek to acquire up to 1.5-2 gigawatts (GW) of stable and long-term cash-generating renewable assets, with a firm focus on diversification of clients of both solar and wind assets as well as the customers of the electricity.
“We are pleased to partner with CPPIB on the launch of the first-ever InvIT in India, focused on renewables. The foundation of this partnership is based on a shared ethos and values that leverage CPPIB’s global track record of value creation in the infrastructure space with Piramal Enterprises’ long-term strategy and goodwill in India," said Ajay Piramal, chairman, Piramal Group.
“We are enthusiastic about the opportunity as it is truly scalable and continue to remain committed to creating value for our shareholders," he added.
Both Piramal Enterprises and CPPIB will act as co-sponsors of the proposed InvIT and hold up to 75% of the units with CPPIB holding up to 60% and Piramal holding 15%.
The two co-sponsors will seek to raise capital from other investors for the remaining 25%.
“The renewable energy sector is at an inflection point and is witnessing significant consolidation, the pace of which is likely to increase in the near future. We believe that the timing is therefore opportune for aggregating assets in this sector given that the existing players are willing sellers in light of a constrained capital market environment—both debt and equity," said Piramal.
This is the first truly neutral “white-label" InvIT—led by a fiduciary and supported by patient capital and strong corporate governance—that we believe, can serve as a strong catalyst for the sector as a whole, he added.
The latest tie-up with CPPIB adds to Piramal’s other ventures with marquee long-term investors.
In February 2017, Piramal entered into a strategic partnership with Ivanhoé Cambridge, a real estate subsidiary of Caisse de dépôt et placement du Québec, Canada’s second-largest pension fund, to provide long-term equity capital to top residential developers across five Indian cities.
In 2016, the company set up a distressed asset investment platform, along with private equity firm Bain Capital Credit, in order to invest $1 billion in stressed assets.
And, in 2014, Piramal tied up with Dutch pension fund APG Asset Management to invest $1 billion in Indian infrastructure companies through structured debt.