Infrastructure may be the easiest asset class to navigate the ongoing turmoil in the global economy buffeted by rising interest rates and high inflation, Ontario Teachers’ Pension Plan (OTPP) president and chief executive Jo Taylor said on Tuesday. He said also that the Canadian pension fund is looking to expand its India exposure considerably over the next three to seven years.
Taylor said, in an interview, that in addition to infrastructure, the pension fund is also considering investments in areas such as healthcare, credit and tech enabled businesses in India.
“The easiest asset category to navigate some of the turmoil at the moment is probably infrastructure, because you are working on a 20- or 30-year contract basis. You can look at the cash flows coming from that opportunity and apply the right discount, and it is probably going to navigate some of those immediate challenges of growth versus value entry valuation,” Taylor said.
“Infrastructure is the easiest,.. probably alongside real estate, which also you can hold long term,” he said.
Similarly, within the electric vehicle category, OTPP is likely to be more interested in infrastructure providing categories such as “charging and storage” around the electricity grid, and less on consumer vehicle EV companies, which are yet to acquire scale in India, he said.
OTPP has made several large infrastructure bets in India over the past year. Last week, it made a $300 million (Rs 2371 crore) investment in renewable energy platform Mahindra Susten for a 30% stake, and said it will also be setting up an Infrastructure Investment Trust. OTPP said it will deploy up to $450 million over the next seven years in Mahindra Susten’s renewable energy platform and the InvIT.
Last month, OTPP took a majority stake in Pune-based Sahyadri Hospitals and in April, it invested $175 million in KKR’s road platform. Similarly, last November, the pension fund bought a 25% stake in National Highways Infra Trust for Rs 1,500 crore.
“We definitely want to expand our exposure to India. We’d also like to be able to scale companies and broaden our partner base,” he said.
As a limited partner, OTPP is invested in funds managed by the National Investment and Infrastructure Fund (NIIF) where it has committed up to $1 billion, as well as in funds managed by Chrys Capital and Kedaara Capital. OTPP is also an investor in a credit fund managed by Edelweiss Alternative Asset Advisors.
Over the next three to seven years, OTPP expects its investments in the Asia Pacific region to be focused around India, China and Australia, said Ben Chan, executive managing director, and head of Asia Pacific.
Meanwhile, the pension fund on Tuesday named Deepak Dara, senior managing director, as its India head. It said that the India office would have around 10 employees by the end of December.
