Canadian public pension funds are planning to funnel US$1 billion of fresh capital into infrastructure investment trusts (InvITs) focusing on renewables and roads.
According to Economic Times, British Columbia Investments (BCI) along with Dutch pension fund APG are looking to invest in Mahindra Susten’s InvIT, which is looking to building a solar energy portfolio backed by long-term power purchase agreements.
Mahindra Susten's businesses include the conglomerate's portfolio of 4GW of completed capacity, as well as an independent power production (IPP) unit with around 1.54GW of operational solar plants, which are being incorporated into the InvIT. It is looking to raise INR40 billion from the sale of a minority stake in its InvIT. The IPP solar portfolio is backed by long-term power purchase agreements with about 75% of assets with central government entities and the remaining with distribution companies backed by state governments.
Canadian fund Ontario Teachers' Pension Plan Board (OTPP) has about 30% stake in Mahindra Susten, which it acquired in September 2022 for INR23.7 billion (US$300 million). Mahindra Susten's InvIT will be the fourth energy-focused trust in the country following KKR's Indigrid and Virescent and Edelweiss' AnZen India Energy Yield Plus Trust.
Meanwhile, the board of Indinfravit has approved a proposal to raise INR43.2 billion (US$530 million) from Canadian pension investors, the Canada Pension Plan Investment Board (CPP) and the Ontario Municipal Employees Retirement System (OMERS). Indinfravit owns and operates Indian road assets and is majority owned by the two investors. The investment funds the acquisition of a portfolio of five road assets from Brookfield at an enterprise valuation of US$1.2 billion.
In a filing dated 25 April. CPP was to be issued 328.74 million units at a price of INR101 per unit, for a cash consideration of INR33.2 billion, while OMERS will be alloted 99 million shares, for a consideration of INR10 billion. The Brookfield portfolio that Indinfravit was planning to acquire comprises three toll road projects - Mumbai Nasik Expressway, Simhapuri Expressway and Rayalseema Expressway - while the other two road assets are annuity projects - Gorakhpur Infrastructure Company and Kosi Bridge Infrastructure Company
IndInfravit’s existing portfolio included thirteen operational road concessions of around 5,000km, generating a revenue of INR17.4 billion in FY2021/22. CPP is the biggest shareholder of Indinfravit with 49.9% shareholding, while OMERS stake stands at 20.03%. Allianz Capital is the other big shareholder of Indinfravit with a 22.7% stake. The proposed funding will take CPP’s stake to around 60%, while OMERS will likely become the second biggest shareholder of Indinfravit.