APG Asset Management NV has evinced interest in acquiring a 51% stake in Tata Power’ renewable energy infrastructure investment trust (InvIT).
InvITs are trusts that manage income-generating infrastructure assets, typically offering investors regular yield and a liquid method of investing in infrastructure projects.
Citibank has been given the mandate to find an investor for the InvIT that will house 3 giag watt (GW) renewable energy projects besides around ₹10,000-12,000 crore of debt.
The others who have separately evinced interest in the proposed InvIT are private equity firm Actis Llp, and Canadian pension fund’ Ontario Municipal Employees’ Retirement System (OMERS), Canada Pension Plan investment Board (CPPIB), Caisse de dйpфt et placement du Quйbec (CDPQ).
Experts believe that these foreign pension funds are India bound as the country fits the risk profile given that the markets here have matured from the early risk stage.
They are also uniquely positioned to invest directly into the infrastructure space given the expertise build by them over a period of time by investing in North America and the Organisation for Economic Co-operation and Development (OECD) countries.
Also, these pension funds represent the so-called patient capital, which seeks modest yields over time.
This interest comes in the backdrop of India unveiling its next generation power sector reforms, that include privatization of electricity distribution companies (discoms); and a new tariff policy which proposes a cost-reflective tariff, penalty on unjustified power cuts and limiting cross-subsidies.
Reference- livemint, Economic Times, Business Standard