Canada Pension Plan Investment Board (CPPIB) and Ontario Teachers’ Pension Plan (OTPP) have invested a total of Rs 3,640 crore ($438 million) in an infrastructure investment trust (InvIT) sponsored by the state-run National Highways Authority of India (NHAI).
CPPIB and OTPP will continue to own 25% of the National Highways Infra Trust (NHIT) after the follow-on investment of Rs 1,820 crore each, the funds said in separate statements.
This is the third time the two pension funds have invested in NHIT; they previously put money into the InvIT in 2021 and 2022. With the additional investment, their total respective commitments to the InvIT have now risen to Rs 3,680 crore each.
The additional investment is part of the InvIT's fundraise of almost Rs 7,300 crore from a group of investors led by the two Canadian funds. The NHAI itself invested about Rs 1,091 crore. A bunch of domestic investors, including mutual funds and insurance companies, contributed the remaining amount of about Rs 2,500 crore. This included Rs 150 crore by Larsen & Toubro Ltd.
The InvIT will use the money to acquire seven road concessions across central, eastern, and southern India. NHIT in December made an offer to NHAI for these projects at a base concession fee of Rs 15,624.9 crore.
Once these assets have all been acquired, the InvIT would own, operate, and maintain a portfolio of 15 toll roads across Assam, Gujarat, Karnataka, Maharashtra, Madhya Pradesh, Rajasthan, Telangana, Uttar Pradesh, and West Bengal spanning a total length of 1,525 km and a concession period ranging between 20 and 30 years.
The InvIT was set up by the NHAI in 2021 in order to monetise its assets and raise more money to construct more highways. Both CPPIB and OTPP had acquired a stake of 25% each for a little over Rs 6,000 crore and had come on board the investment vehicle as anchor investors.
NHAI initially transferred five highway projects to the InvIT. These roads had a combined length of 389 km and an enterprise value north of Rs 8,000 crore. The InvIT bought three roads in the second tranche. These were valued around Rs 3,800 crore and spanned a route length of around 247 km.
“India remains a key market for CPP Investments and infrastructure is vital to the country’s economic growth. Our follow-on investment in NHIT deepens our commitment to this highly scalable platform, which has an important role to play in the continued expansion of the Indian road network,” said James Bryce, Managing Director, Head of Infrastructure, CPP Investments.
CPPIB, the larger of the two pension funds, manages assets worth more than $434 billion across various asset classes including infrastructure and private equity. OTPP manages assets worth $247 billion in around 50 countries.