India-gate

Pension Funds Attracted To India’s Infrastructure, Real Estate

India gate

Money is flowing into India as The Canada Pension Plan, along with a handful of other pension funds from around the globe, are increasingly investing in the country’s infrastructure and real estate. From the Financial Times:

CPPIB [Canada Pension Plan Investment Board] entered India in 2010 but has recently raised its profile with a series of deals involving long-term assets such as toll roads and residential property, creating a portfolio of planned investments worth $1.4bn that already ranks among the largest investments in the country by a foreign pension fund.

“Because it is a very small percentage [of the fund’s overall assets], clearly it is likely to grow, as India keeps growing and developing,” Mr [Mark] Machin, [international head of CPPIB] said.

“We will almost inevitably have more money focused on India. . . It is one of the most important markets for us in the region,” he added.

[…]

In June, CPPIB announced a $332m infrastructure investment partnership with a division of Larsen & Toubro, India’s largest engineering group by sales. That followed deals to invest in real estate with two family-owned conglomerates, the Piramal and Shapoorji Pallonji groups.

The fund has also built up large portfolios in Australia and China, with deals worth $5.9bn and $4.1bn respectively, in assets ranging from property development to logistics.

The Canada Pension Plan is one of many pension funds turning its focus to India. From FirstBiz:

Many sovereign and pension funds are pumping funds into the Indian real estate like All Pensions Group (APG Group), Abu Dhabi Investment Authority (ADIA), Qatar Investment Authority (QIA), Canada Pension Plan Investment Board (CPPIB), State General Reserve Fund of Oman (SGRF) and GIC of Singapore.

It’s no coincidence that investment interest has perked up following the election of Prime Minister Narendra Modi. Mr. Modi has said he’ll lift some restrictions on foreign investment and kick-start a new wave of infrastructure projects.

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