Piramal Enterprises and Canada Pension Plan Investment Board (CPPIB) will set up a renewable energy-focused Infrastructure Investment Trust (InvIT).
The initial corpus will be $600 million, Piramal said. CPPIB is committing $360 million and will hold up to 60 per cent stake while Piramal will commit $90 million and hold 15 per cent. They aim to raise capital from other investors for the remaining 25 per cent.
Piramal would be the sole investment manager and project manager for the proposed InvIT. The latter would seek to acquire up to 1.5-2 Gw of ‘stable and cash-generating renewable assets, on a hold-to-maturity basis’.
This will be the first InvIT in India with a renewable energy focus.
“The renewable energy sector is at an inflection point and is witnessing significant consolidation, the pace of which is likely to increase in the future,” said Ajay Piramal, chairman, Piramal Group. “We believe the timing is, therefore, opportune for aggregating assets in this sector, given that the existing players are willing sellers, in light of a constrained capital market environment — both debt and equity.” For CPPIB, this would be a second investment in the InvIT model in India. It also holds investment in L&T Infrastructure Development Projects’ IndInfravit, which holds five road projects.
Since the Securities and Exchange Board of India has allowed the product, four InvITs have started operations, with two having gone public. There are at least three more in the offing, mostly looking at a private route. Piramal-CPPIB is the latest addition and is expected to take six to nine months for completion.
IRB Infrastructure Developers’ IRB InvIT Fund and Sterlite Power’s India Grid Trust are listed InvITs. L&T IDPL's IndInfravit Trust and Brookfield’s India Infrastructure Fund are privately held.