India-Canada renewables fund aims for $600m cash pot

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Industry analysts are speculating about the prospect of Indian conglomerate Piramal Group acquiring renewable power projects from clean energy generator Mytrah Energy.

Expectations have been raised after the Piramal Enterprises Limited unit of Mumbai-headquartered Piramal announced plans to invest in a renewables-focused Infrastructure Investment Trust alongside the Canada Pension Plan Investment Board.

The partners have committed to provide funds towards an initial US$600 million (Rs4,220 crore) for the infrastructure fund and analysts believe some of the cash will be spent on projects developed by Mytrah, which claims to have a 2 GW operational and in-development portfolio.

The $600-million Infrastructure Investment Trust aims to acquire 1.5-2 GW of cash-generating renewables assets, with a focus on diversification in asset type and off-takers.

Under the terms of the trust’s establishment, the Canadian partner will provide $360 million and hold up to a 60% interest and Piramal Enterprises will commit $90 million for a stake of up to 15%. The partners intend to raise a further $150 million to reach the $600 million target.

Crucially, Piramal would be the trust’s investment and project manager, despite its small holding, fueling speculation linking the fund to assets held by Mytrah, which is based in Saint Peter Port on the Channel Island of Guernsey, in the U.K.

Partner strengths

“We are pleased to partner with CPPIB [the Canada Pension Plan Investment Board] on the launch of the first ever InvIT [Infrastructure Investment Trust] in India focused on renewables,” said Piramal Group chairman Ajay Piramal. “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 PEL’s [Piramal Enterprises Limited] long term strategy and goodwill in India.

“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. 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.”

Valued at $10 billion, the Piramal Group is a global business conglomerate with interests in pharmaceuticals, financial services, information management, real estate and glass packaging. The Group has offices in more than 30 countries and a global brand presence in more than 100 markets.

Headquartered in Toronto, the CPPIB is a professional investment management organisation that invests funds not needed to pay current benefits by the Canada Pension Plan (CPP) on behalf of 20 million contributors and beneficiaries. With almost $370 billion worth of assets, the CPP fund is ranked as one of the 10 largest retirement funds in the world.