Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ) is bullish on infrastructure funding alternatives in India and needs to fund the net-zero transition journey of Indian corporations, in accordance with senior executives.
CDPQ, which started investing in India in 2016, has up to now invested Canadian $8 billion within the nation throughout infrastructure, actual property, public markets, mounted revenue, and personal fairness. “We’re very bullish on India. There may be nice potential for investments there. The federal government is placing quite a lot of emphasis on—and cash into—infrastructure, and it is vitally targeted on rising the convenience of doing enterprise in India. Accordingly, there are quite a lot of progress alternatives for CDPQ, and we’re taking a look at a variety of choices,” mentioned Kenneth Juster, senior adviser, CDPQ International and a former US ambassador to India.
Given the long-term, affected person nature of its capital, the pension fund needs to deal with constructing partnerships and platforms to take a position and reinvest massive sums of capital over lengthy intervals as an alternative of investing in single belongings. “Our core technique is constructing partnerships the place we are able to deploy constructive capital, which implies that every funding we make brings long-term worth to that enterprise and to the planet. This additionally implies that ESG and sustainability are elementary pillars of our funding technique. We need to construct companies for the long run, the place we are able to put in significant governance, forge sturdy partnerships and alliances for sustainable progress, and in the end create leaders of their respective sectors who can form the long run by means of thought management and affect,” mentioned Saurabh Agarwal, managing director, CDPQ India and managing director, infrastructure, South Asia and the Center East.
“We’re constructing long-term platforms primarily based on our constructive capital theme. It’s not about investing in a particular challenge or a one-time transaction; we’re investing in holding firms, aligning with—and backing—our companions and the administration groups, which permits us to repeatedly reinvest capital over a time period as the corporate or partnership grows,” added Agarwal.
By its platforms, the pension fund is investing throughout the spectrum from greenfield to brownfield tasks in infrastructure and from stress to performing credit score in mounted revenue.
For example, the fund has invested Canadian $650 million in its photo voltaic vitality platform Azure Energy since 2016, taking the corporate from 350 megawatts working enterprise to three gigawatts (GW) working belongings and a pipeline of 5GW.
It has additionally arrange a platform for investments in roads known as Maple Highways, which is within the means of buying three working belongings, together with one beneath the Nationwide Highways Authority of India’s Toll-Function-Switch (TOT) mannequin.
“Along with renewable vitality and roads, we’re additionally exploring funding partnerships in sectors similar to fibre, towers, and knowledge centres,” mentioned Agarwal.
One other main alternative that CDPQ is exploring is the vitality transition area in India. “Vitality transition is essential for us. Business is just not going to have the ability to transfer from fossil fuels to renewables in a single day. Thus, there may be vital alternative in funding the transition part for firms from fossil fuels to renewables,” mentioned Juster.
Agarwal added that the fund supervisor is keenly watching the vitality transition area, the place it needs to see the way it can expedite and speed up the transition of the Indian carbon-based economic system right into a inexperienced one.
“CDPQ is dedicated to working with—and offering our capital to—best-in-class vitality firms on a transition in direction of a greener economic system. As a part of our new local weather technique, we’ve got an envelope of capital reserved for funding vitality transition companies and may make investments into companies that are at present carbon-heavy however have a transparent path in direction of turning into net-zero,” he mentioned. “Not many traders can take that stance at present, and we strongly imagine this shall be a supply of enticing funding alternatives,” he added.
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