CDPQ seeks investors for India roads InvIT
CDPQ, which invested $7 bn in India, has set up a platform called Maple Highways to house operating road assets
PremiumMUMBAI : Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ) is seeking investors for its Indian roads infrastructure investment trust (InvIT) as the pension fund looks to meet regulatory requirements of minimum dilution of 25% stake, two people aware of the development said.
InvITs are trusts that manage income-generating infrastructure assets, typically offering investors regular yield and a liquid method of investing in infrastructure projects. According to Sebi norms, privately placed unlisted InvITs are required to have a minimum of five investors, other than sponsor(s), its related parties and its associates, at all times. Further, the norms mandate that such investors, categorized as ‘public investors’, hold at least 25% of the total unit capital at all times.
CDPQ, which invested around $7 billion in India, has set up a platform called Maple Highways to house the operating road assets that it buys in India.
“CDPQ is in talks with institutional investors such as pension funds and insurance companies to sell a stake in the InvIT. They could raise as much as ₹1,000 crore or more through this stake sale. While the InvIT previously met the regulatory requirement, the addition of the TOT-7 package, which Maple Highways is acquiring from NHAI, will increase the size of the InvIT, thus requiring CDPQ to sell some more stake to be in compliance with the 25% dilution norm," said the first person cited above.
The TOT-7 package comprises a 135-km-long eastern peripheral expressway project in Delhi-NCR, for which Maple bid ₹6,267 crore.
Apart from the TOT bundle, Maple’s InvIT comprises Shree Jagannath Expressway, a 67km toll road project from Bhubaneswar to Chandikhole in Odisha, acquired from Bharat Road Network Ltd and the 18.6km Durg Bypass acquired from the Tata group.
A CDPQ spokesperson declined to comment on the development.
InvITs have emerged as a preferred route for investors to invest in roads in India. Foreign investors such as insurance companies and pension funds seeking yield generating assets are finding Indian road assets to be an attractive investment opportunity.
Mint reported in September that Cube Highways, the largest investor in road projects in India, was in talks with pension funds and sovereign wealth funds to raise as much as $1 billion through an InvIT.
In November, NHAI raised around ₹6,000 crore for its roads InvIT by selling a stake to international and domestic investors, including Canada Pension Plan Investment Board and Ontario Teachers’ Pension Plan Board.
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