In line with its stated intention of investing in the country’s infrastructure space, Piramal Enterprises Ltd. (PEL), the diversified company belonging to the Piramal group, on Wednesday announced a strategic alliance with APG Asset Management, the Dutch pension fund asset manager to invest in infrastructure companies in India.
The investment, which is one of the largest private sector commitments to the infrastructure sector in India, will be in rupee denominated mezzanine instruments issued by infrastructure companies and the target is to reach $ 1 billion investment over the next three years, a joint statement said.
Both partners have initially committed $ 375 million each for investments in the alliance.
This strategic pool of capital will focus on operational and near completion projects with limited execution risks and high visibility of cash flows coming from a portfolio of projects. The access to this source of capital will enable infrastructure players in India to retain their equity interest in the assets, while raising long term capital to help them complete their on-going infrastructure projects and enhance shareholder value, the statement said.
Speaking to this correspondent, Jayesh Desai, co-Head, Structured Investment Group (SIG), PEL said the ticket size of investment would be between $ 50-150 million (Rs 300-900 crore). “The focus of our investments would be on projects nearing completion and investments would be across all infrastructure projects including education and social sectors. We are looking at an investment horizon of five years or longer and the first investment would be made in the next three to six months.’’
Over US $ 150 billion of equity and mezzanine funding is required to meet government target investment of US $ 1 trillion until 2017 and this is the gap which our strategic alliance seeks to bridge. “Mezzanine investments for infrastructure sector in India offers a compelling investment proposition as it addresses the void in the capital stack, which currently exists in the market place,’’ Mr. Desai said.
“This is an opportune time to be creating an aligned pool of capital to target what we believe to be very compelling funding opportunities in the infrastructure sector in India,’’ Ajay Piramal, Chairman, PEL said in a statement. “The alliance is consistent with PEL’s long-term plan and vision of playing a contributing role towards investments that promote growth.’’
On the Bombay Stock Exchange, PEL rose 0.98 per cent to close trade at Rs 640.8.
