Piramal Capital and Housing Finance (PCHFL) is in discussions with its current partners — Canadian Pension Plan Investment Board (CPPIB), Caisse de dépôt et placement du Québec (CDPQ) and Dutch financial services major APG Group — as well as asset manager Brookfield, to raise $550 million to invest in roads and renewable energy in India.
According to sources in the know of things, the Piramal Enterprises subsidiary has secured commitments of $200-250 million so far. The new platform will acquire stakes in operating roads and renewable energy assets to earn yield income. Sources also said about 10% of the fund’s total amount would come from the Piramal Group as sponsor commitment.
CDPQ, PCHFL and Brookfield did not respond to emails seeking comments for this article while CPPIB and APG said they do not comment on market speculation.
In a conference call with analysts on July 30, Khushru Jijina, MD, PCHFL, said the company has applied to the Securities and Exchange Board of India (Sebi) for an alternative investment fund (AFI) licence. He added the company is identifying and hiring people to set up the new investment platform.
In 2014, PCHFL partnered with APG to make mezzanine investments in Indian infrastructure, as they joined hands to create a $1-billion platform. Last year, it invested Rs 1,900 crore ($300 million) in Mytrah Energy to buy out Apollo Global Management, Aion, Goldman Sachs, Bank of America Merill Lynch and IDFC Alternatives.
PCHFL also formed a partnership in 2017 with Ivanhoe Cambridge, a subsidiary of CDPQ, to invest in top residential housing in five metropolitan cities. A third partnership, from 2014, is with CPPIB, to provide debt financing, also for residential projects. At that time, both Piramal Enterprises and CPPIB committed $250 million each.
Piramal has also backed ACME Solar, Green Infra and Essel Green Energy.
According to research and ratings firm Icra, the opportunity for mergers and acquisitions activity is the highest in the roads sector. Icra estimates there are over 85 highway projects, totalling more than 7,000 km, with a total project cost of about `70,000 crore and with a median operational track record of four years.