India's Piramal forms $1b Infra platform with APG

According to a release, each will make an initial commitment of $375 million. The investments - which will be made via rupee denominated mezzanine instruments issued by the target companies - will focus on operational and near completion projects with limited execution risks and high visibility of cash flows

The capital injection is expect to enable infrastructure players in India to retain their equity interest in the assets, while raising the long-term capital needed to complete on-going infrastructure projects and enhance shareholder value.

"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.," said Ajay Piramal, chairman of Piramal Enterprise. "This is the single-largest investment of APG in the unlisted space in India to date and underlines the confidence reposed by institutional investors in Piramal Group's capabilities."

It is estimated that over $150 billion of equity and mezzanine funding is required to meet the government target investment of $1 trillion until 2017 - a gap the partnership is trying to bridge.

"The current market circumstances where there is a mismatch between demand and supply of capital creates a window of opportunity to make mezzanine investments in Indian infrastructure," said Hans-Martin Aerts, head of infrastructure Asia at APG.

"We believe that the infrastructure  sector in India is at an inflection point. Given the strong push of the new government on sector revival through conducive policy measures, the funding from this strategic alliance  will help infrastructure companies to recycle capital and contribute significantly to the further development of India's infrastructure sector."

APG manages pension assets of 4.5 million people in both the private and public sectors, totaling about EUR375 billion ($502 billion). This is not the first platform investment created by APG in India In 2012, APG launched another partnership with Godrej Properties where it led a group of foreign investors to commit INR7.7 billion (the $138 million) for a majority owned residential property development platform with Godrej Properties.

 

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