The Infrastructure Investment Trust (InvIT), which will have an initial corpus of $600 million, and the option to scale further, would seek to acquire up to 1.5-2 GW of stable and cash generating renewable assets on a hold-to-maturity basis, with a firm focus on diversification of both asset type as well as off-taker profile.
Piramal Enterprises (PEL) said on Tuesday it has signed a memorandum of understanding (MoU) with Canada Pension Plan Investment Board (CPPIB) to co-sponsor renewable energy-focused Infrastructure Investment Trust. The Infrastructure Investment Trust (InvIT), which will have an initial corpus of $600 million, and the option to scale further, would seek to acquire up to 1.5-2 GW of stable and cash generating renewable assets on a hold-to-maturity basis, with a firm focus on diversification of both asset type as well as off-taker profile.
Both Piramal Enterprises and CPPIB will act as co-sponsors of the proposed InvIT and will hold up to 75% of the units and seek to raise capital from other like-minded investors for the remaining 25%. CPPIB will commit $360 million and hold up to 60% while PEL will commit $90 million and hold 15%.
In the interim and prior to its launch, PEL and CPPIB will jointly warehouse seed assets for the proposed InvIT. PEL would act as the sole investment manager as well as project manager for the proposed InvIT.
Ajay Piramal, chairman, Piramal Group, said the renewable energy sector is at an inflection point and is witnessing significant consolidation, the pace of which is likely to increase in the near future. “We believe that 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. This is the first truly neutral ‘white-label’ InvIT – led by a fiduciary and supported by patient capital and strong corporate governance – that we believe, can serve as a strong catalyst for the sector as a whole,” he said.
Earlier, Piramal Group had launched a distressed asset investing platform with Bain Capital Credit — IndiaRF— that will invest in equity and/or debt in assets across sectors (other than real estate) to drive restructuring with active participation in turnaround. CPPIB is a professional investment management organisation that invests the funds not needed by the Canada Pension Plan (CPP). CPPIB invests in public equities, private equities, real estate, infrastructure and fixed income instruments.
Headquartered in Toronto, with offices in Hong Kong, London, Luxembourg, Mumbai, New York City, Sao Paulo and Sydney, CPPIB is governed and managed independently of the Canada Pension Plan and at arm’s length from governments. On December 31, 2018, the CPP Fund totalled $368.50 billion.