Some Canadian pension funds are investing in the infrastructure of India as the world’s now most-populous nation undergoes rapid urbanization.
India has long underinvested in its infrastructure needs and the government of Prime Minister Narendra Modi has committed to grow the Indian economy to $5 trillion by 2025, noted Bernard Chua, New York-based vice president and senior client portfolio manager at American Century Investments. To achieve this goal, the government has committed to spend $1.5 trillion on infrastructure projects from 2020 to 2025. The Indian Ministry of Finance said in a statement this endeavor is being jointly funded by the central government, the state governments and the private sector.
Other infrastructure investment ideas are coming from foreign sources.
Indeed, on July 17, during the G20 finance ministers meeting held in Gandhinagar, India, India’s Ministry of Finance tweeted that Canadian Deputy Prime Minister and Minister of Finance Chrystia Freeland informed Indian Finance Minister Nirmala Sitharaman that “Canadian pension funds would be keen to explore investing in Indian infrastructure funds as India offers a stable investment climate.”
Some Canadian plans have already been allocating to India for several years.
Deepak Dara, Mumbai-based senior managing director and head of India at Ontario Teachers’ Pension Plan, Toronto, said OTPP’s first significant infrastructure investment in India occurred in August 2019 when the pension plan committed to invest up to $1 billion in the National Investment and Infrastructure Fund, an Indian fund manager that invests in infrastructure and related sectors in India.
“We’ve been disciplined about how we’ve built up our capabilities in India and infrastructure has been a core building block for our investment activities in the country,” Mr. Dara said by email.
“This partnership with NIIF provided us with on-the-ground market insights and was key as we built out our capabilities and presence in India.”
Mr. Dara estimated that OTPP has now invested and/or committed more than C$4.5 billion ($3.4 billion) to India across different asset class groups, with about 50% of that figure in infrastructure platforms.
Some of OTPP’s other major Indian infrastructure investments include renewable energy firm Mahindra Susten; the Highways Infrastructure Trust, a road platform with KKR & Co. Inc; and the Sustainable Energy Infrastructure Trust, a renewables-focused investment trust.
OTPP opened up an office in Mumbai last year as part of its long-term commitment to investing in the country.
“There are many advantages to having a team on the ground in the country, including having on- the-ground intelligence, closer proximity to our portfolio companies, a greater ability to nurture strong long-term relationships, and the ability to access high-quality local talent,” Mr. Dara noted.
OTPP is likely to continue investing in India in the years to come across asset classes including infrastructure, he added. OTPP had net assets of C$247.2 billion as at Dec. 31.