In December, the Canada Pension Plan Investment Board (CPPIB) made a $157 million investment in the infrastructure arm of an Indian engineering company.
The CPPIB says investments with India are a “key part” of its long-term plans.
Other pension funds may also find the county’s infrastructure to be an attractive investment. From the Economic Times:
Indian road projects are likely to post a significant rise in merger and acquisition activity in 2015 as pension and private equity funds are eyeing these projects for handsome returns.
Increase in road traffic and a better economic climate have made the sector lucrative for investors with deep pockets, looking for long-term investment opportunities. In the last one month, two road projects have changed hands and sector players and experts anticipate more such deals in the offing.” Funds and institutional investors are interested in high yield, long-term investments and road projects offer a good opportunity.
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“Revenue from roads will improve as GDP picks up, so it is an attractive investment option. The slowdown in the last two-three years has dampened the price expectation of developers, so the mismatch in valuation expectation has reduced,” said MK Sinha, managing partner and chief executive officer of IDFC Alternatives.
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Infrastructure industry players said that more pension funds are in the market scouting for investment opportunities, with a clear preference for operational road projects. Pension funds primarily manage funds for people who are retiring and looking for low-risk investments with consistent returns for in the long term. Their interest in Indian infrastructure will augur well for the capital-intensive business whose long-term capital needs cannot be met my banks alone.
In 2014 the CPPIB announced plans to open an India office.