CPPIB and Allianz back new Indian toll road trust

The two institutional investors have acquired 55% of shares in IndInfravit, an infrastructure investment vehicle sponsored by L&T IDPL.

Canada Pension Plan Investment Board and Allianz Capital Partners are anchor investors in IndInfravit Trust, an infrastructure investment trust sponsored by Indian developer L&T Infrastructure Development Projects, which listed on the National Stock Exchange of India and BSE on Thursday.

The Canadian pension is investing approximately C$200 million ($155.8 million; €131.4 million) for 30 percent of shares in IndInfravit, while ACP, on behalf of Allianz insurance companies, has bought 25 percent of shares for approximately €120 million via a private placement. L&T IDPL, the sponsor and also manager of the trust, holds 15 percent, while other local and international institutional investors subscribed for the remaining 30 percent, according to a CPPIB statement.

IndInfravit will focus on the development of toll roads and road infrastructure in India. Currently, it has acquired five toll roads constructed by L&T IDPL, which have been in operation for the past five years and run through the states of Karnataka, Telangana, Tamil Nadu and Rajasthan.

For ACP, which is Allianz Group’s in-house investment manager for alternative equity investments, the transaction marks its first direct investment in Asia.

“We invest in assets which provide essential services to the public and which are in strong markets with a robust regulatory framework,” an ACP spokeswoman told Infrastructure Investor. “Asia is an interesting market for us and one that we will be monitoring closely for investment opportunities,” she added.

For CPPIB, the investment adds to the C$6.4 billion the pension fund has already invested in India’s infrastructure, real estate and financial services sectors since 2012.

The C$337.1 billion pension fund is also invested in L&T IDPL, having bought a total of C$400 million compulsory convertible preference shares in 2014 and 2015. Other investments include Bharti Airtel’s telecom towers business and a 6.3 percent stake CPPIB acquired in renewables firm ReNew Power Ventures in January.

CPPIB and ACP have partnered in the past – jointly investing in Gas Natural’s gas distribution business in Spain last August.

While IndInfravit is the first private infrastructure investment trust in India, it is the third such vehicle created to invest in the sector. The first, IRBInvIT, was launched last May by local road developer IRB Infrastructure Developers. Two weeks later, India Grid Trust followed. Sponsored by Sterlite Power Grid Ventures, the vehicle focuses on the power transmission sector. Collectively, the two vehicles raised more than $1 billion through initial public offerings.