Piramal, CPPIB launch renewable energy fund

Piramal Enterprises and the Canada Pension Plan Investment Board (CPPIB) have entered a preliminary agreement to set up a renewable energy-focused Infrastructure Investment Trust (InvIT) with an initial corpus of US$600 million

May 7, 2019

Announced on May 7, the trust will have an initial corpus of US$600 million, with the option of scaling up in the future

The InvIT partnership comes as the Indian Government is looking to set up 175 GW of renewable energy assets by 2022

CPPIB will commit US$360 million and hold up to 60% stake in InvIT, Piramal will commit US$90 million with 15% holding

InvIT will aim to raise capital for the remaining 25% stake; The sector has seen steady growth in investment and innovation

Piramal Enterprises Ltd and the Canada Pension Plan Investment Board (CPPIB) have signed a preliminary agreement to set up a renewable energy focused Infrastructure Investment Trust (InvIT). Announced on May 7, the trust will have an initial corpus of US$600 million, with the option of scaling up in the future. The proposed InvIT plans to acquire up to 2GW of high-quality renewables assets on a hold-to-maturity basis. The fund will focus on both diversification of asset type as well as off-taker profile. The partnership comes as the Indian Government is looking to set up 175 GW of renewable energy assets by 2022.

CPPIB, a Canadian pension fund, and Piramal, an Indian conglomerate with interests spanning healthcare to real estate, will be co-sponsors of the InvIT and hold up to 75 per cent of the fund. CPPIB will commit US$360 million and hold up to 60 per cent stake, while Piramal will commit US$90 million with a 15 per cent holding. The duo will aim to raise capital for the remaining 25 per cent stake. In the interim period and prior to its launch, Piramal and CPPIB will warehouse seed assets to set up the InvIT. Meanwhile, Piramal said that it would act as the sole investment manager as well as project manager for the InvIT.

The project marks the first ever InvIT in India, focused on renewables. Piramal said that the project was the “first truly neutral ‘white-label’ InvIT – led by a fiduciary and supported by patient capital and strong corporate governance – that we can serve as a strong catalyst for the sector as a whole.” India has come up as a global leader in renewable capacity addition. India ranks 5th worldwide in renewable capacity, while ranking 4th in wind power capacity and 5th in solar power. As a result, by March 2019, over 21 per cent of India’s total power generation capacity of over 350 GW was represented by renewable resources.

With renewable energy making fast inroads at both utility and residential levels, the sector has seen a steady growth in investment and innovation. When active, the new capacity will help move 40 per cent of India’s power generation to clean sources by 2030. The Government, meanwhile, has taken up the latest practices in renewables such as solar-wind hybrid generation, offshore wind generation to further expand capacity. Apart from power generation, focus has been given to power transmission, distribution and storage infrastructure. India is looking to have a total renewable capacity of 275 GW by 2027.