Mumbai: PSP Investments has become the second Canadian pension fund to expand its footprint in India’s highways sector, assuming ownership of four toll roads totalling 710km as part of a global transaction with Spanish infrastructure company Grupo Isolux Corsan.
These are a 291km road from Panipat to Jalandhar in Haryana and Punjab, a 94km project from Kishangarh to Beawar in Rajasthan, a 133km project from the Maharashtra-Gujarat border to Hazira in Gujarat and a 192km project from Varanasi in Uttar Pradesh to Aurangabad in Bihar.
Isolux Corsan in May said it has completed the legal process of separating subsidiary Isolux Infrastructure from itself in order to transfer a portfolio of nine global road assets to PSP Investments. PSP has renamed Isolux Infrastructure as ROADIS, a highways platform. The deal value was not disclosed. On Wednesday, the Canadian fund said ROADIS, which owns four road assets in India and five others across Mexico, Brazil, Spain, and the US totalling 1,644km, has now become its subsidiary.
The Indian assets will be headed by Nithyanand Appak, a company spokesperson said in response to an email query. According to the Isolux website, €2 billion (about Rs.15,100 crore) was invested in these four projects.
The other Canadian pension fund with a large investment in India’s roads sector is the Canada Pension Plan Investment Board, the country’s largest pension fund. In 2014, it announced it would invest a Rs.2,000 crore in Larsen and Toubro Ltd subsidiary L&T IDPL, which owns 17 road assets.
In November, PSP had agreed to buy a 49% stake in the electricity generation, transmission and distribution business of Anil Ambani’s Reliance Infrastructure Ltd in Mumbai and adjoining areas. The deal is yet to close.
In October, Mint had reported that Canadian Pension funds including Caisse de depot et placement du Quebec (CDPQ) and PSP Investments were looking to invest in the Indian infrastructure sector and have started scouting for assets. Global pension funds and sovereign wealth funds may invest up to $50 billion in the sector over the next five years, said a March report by investment bank Ambit Corporate Finance.
Of the four ROADIS road projects in India, three in Rajasthan, Gujarat and Uttar Pradesh were built under a joint venture with Morgan Stanley Infrastructure (MSI), the infrastructure investing platform of Morgan Stanley. In 2011, MSI and Isolux Corsan jointly committed an investment of $400 million to construct three highway projects in India. The three projects, spanning over 400km, had an estimated cost of over $1.6 billion. These projects were won by Isolux Corsan Concesiones, an Indian subsidiary of Isolux Corsan, on a build-operate-transfer basis.
PSP Investments had 112 billion Canadian dollars in net assets under management as of 30 September. It manages a diversified global portfolio of investments in public financial markets, private equity, real estate, infrastructure, natural resources and private debt.
Madrid-based Isolux Corsan also operates power transmission projects in India.