OTPP, AustralianSuper Invest in India's NIIF
The agreements include commitments of USD 250 million each in the Master Fund and co-investment rights of up to USD 750 million each in future opportunities alongside the Fund.This is a big deal for Ontario Teachers' and AustralianSuper. The National Investment and Infrastructure Fund Limited (NIIFL) is an investor-owned fund manager, anchored by the Government of India in collaboration with leading global and domestic institutional investors.
This marks the third close of the NIIF Master Fund. AustralianSuper and Ontario Teachers’ will now join the Government of India (GOI), Abu Dhabi Investment Authority (ADIA), Temasek, HDFC Group, ICICI Bank, Kotak Mahindra Life Insurance and Axis Bank as investors in the Fund.
AustralianSuper and Ontario Teachers’ will also become shareholders in National Investment and Infrastructure Fund Limited, NIIF’s investment management company. Domestic investors HDFC Life and Kotak Bank have further committed INR 600 million in the third round.
With this, NIIF Master Fund becomes the largest infrastructure fund in India with assets under management of over USD 1.8 billion and a co-investment pool of USD 2.5 billion, which will enable the Fund to invest at the scale required for the large infrastructure requirements in India. The Fund invests in equity capital in core infrastructure sectors in India with a focus on transportation, energy and urban infrastructure. The Master Fund, has a tenure of 15 years and is denominated in Indian Rupees to suit the requirements of the infrastructure sector.
Sujoy Bose, Managing Director & Chief Executive Officer of NIIF, said: “We are delighted to welcome two of the world’s leading pension funds as investors in the NIIF Master Fund and as shareholders of National Investment and Infrastructure Fund Limited, alongside other eminent investors. AustralianSuper and Ontario Teachers’ are among the most respected infrastructure investors in the world and bring considerable global perspective and value to NIIF. Their significant investments demonstrate the international interest in Indian infrastructure and reconfirms the many strengths of NIIF, which positions it as one of the primary Indian pooling vehicles for global capital”.
Dale Burgess, Senior Managing Director, Infrastructure & Natural Resources of Ontario Teachers’, said: “NIIF's investment strategy aligns with the long-term and partner-oriented investing approach we have successfully used in other regions.”
Ben Chan, Regional Managing Director, Asia Pacific of Ontario Teachers’, said: “A commitment to NIIF will substantially bolster Ontario Teachers’ presence in India, providing us with on-the-ground market insights and capabilities to be well-positioned in a large market with significant expected growth.”
Mark Delaney, Chief Investment Officer with AustralianSuper, said: “India's burgeoning infrastructure market is among the largest in Asia, which presents many opportunities for investment. We are pleased to have entered into this agreement with the NIIF Master Fund and to be shareholders of National Investment and Infrastructure Fund Limited and look forward to participating in a strong pipeline of projects across a range of sectors.”
NIIF is a fund manager that invests in infrastructure and related sectors in India. An institution anchored by the Government of India, NIIF is a collaborative investment platform for international and Indian investors with a mandate to invest equity capital in domestic infrastructure. NIIF benefits from its association with the Government yet is independent in its investment decisions being majority owned by institutional investors and managed professionally by a team with experience in investments and infrastructure. NIIF aims to make commercial investments in the sector at scale. NIIFL manages over USD 4 billion of capital commitments across three funds, each with its distinct investment strategy. The funds have investment mandates to invest in infrastructure assets and related businesses that are likely to benefit from the long-term growth trajectory of the Indian economy.
For more information on NIIF, please visit www.niifindia.in or follow us on LinkedIn at https://www.linkedin.com/company/national-investment-and-infrastructure-fund-niif/
AustralianSuper is the largest superannuation fund in Australia with member assets of more than $165 billion, making it one of the 40 largest pension funds in the world. The Fund’s core focus is maximizing long-term investment returns, with the Balanced Investment Option ranked in the top performing funds over the last three, five, 10, 15 and 20 years. AustralianSuper has a broad investment mandate and invests across multiple asset classes, geographic markets and at different points in the capital structure. Investment management and origination are undertaken directly by the in-house investment team, and through a global network of investment partners and managers who provide access to valued skills, insights and investment opportunities. AustralianSuper is headquartered in Melbourne Australia. The Fund has growing global footprint, with offices in London and Beijing. For more information, visit: www.australiansuper.com
About Ontario Teachers'
Ontario Teachers' is Canada's largest single-profession pension plan, with CAD $191.1 billion in net assets (all figures as at Dec. 31, 2018). It holds a diverse global portfolio of assets, approximately 80% of which is managed in-house, and has earned an annual total-fund net return of 9.7% since the plan's founding in 1990. Ontario Teachers' is an independent organization headquartered in Toronto. Its Asia-Pacific region office is located in Hong Kong and its Europe, Middle East & Africa region office is in London. The defined-benefit plan, which is fully funded, invests and administers the pensions of the province of Ontario's 327,000 active and retired teachers. For more information, visit otpp.com and follow us on Twitter @OtppInfo.
According to this Mint article:
NIIF, which was set up in 2015 along the lines of a sovereign wealth fund with 49% equity held by the Union government, looks to boost infrastructure financing in the country. The latest investment pegs the NIIF master fund as the largest infrastructure fund in India with assets of over $1.8 billion under management and a co-investment pool of $2.5 billion.You'll recall the Caisse did a deal with DP World when it made its first investment in Chile's ports.
Master fund had earlier raised capital from UAE’s sovereign wealth fund, Abu Dhabi Investment Authority (ADIA), Singapore’s state investment arm Temasek, HDFC Group, ICICI Bank, Kotak Mahindra Life Insurance and Axis Bank.
While Temasek had agreed to invest $400 million into NIIF’s master fund in 2018, ADIA had committed $1 billion in 2017 along with other domestic private sector investors, which together invested ₹500 crore in the fund.
The fund, with a 15-year tenure, is denominated in Indian rupees and invests in equity capital in core infrastructure sectors in India with a focus on transportation, energy and urban infrastructure. It made its first investment last year by partnering with Dubai-based DP World to buy Continental Warehousing Corp., one of the largest logistics companies in India. Hindustan Infralog, the $3-billion ports and logistics platform created by NIIF and DP World, seeks to invest in ports, terminals, transportation and logistics.
With over $3 billion of capital commitments across three funds—‘master fund’, ‘fund of funds’ and ‘strategic fund’, NIIF looks to invest in operating assets, greenfield projects and anchor third-party managed funds in core infrastructure and related segments.
India's infrastructure is very popular among Canadian and global pension and sovereign wealth funds. I recently discussed how CDPQ and CPPIB are vying for India's toll roads portfolio and how OMERS is seeking new green energy deals in India.
It's also worth noting that cash-strapped Essel Infraprojects is now trying to sell road projects to a joint venture platform between India’s National Investment and Infrastructure Fund (NIIF) and Roadis, which is owned by PSP Investments.
Why is India such a hot market for infrastructure? Industrialization and the rise of the middle class made up of a young population which will look to eventually own 2 cars, travel, buy goods from the internet (e-commerce) and produce more renewable energy.
What I find interesting about the Teachers' deal is AustralianSuper and Teachers’ will also become shareholders in National Investment and Infrastructure Fund Limited, NIIF’s investment management company, along with domestic investors HDFC Life and Kotak Bank which have further committed INR 600 million in the third round.
In related news, Genting Hong Kong (GHK) today announced an agreement for TPG Capital Asia, TPG Growth and Ontario Teachers’ Pension Plan to acquire up to a 35% equity interest in Dream Cruises, one of the leading cruise brands owned by GHK:
The consideration for the 35% equity interest is US$489 million, valuing Dream Cruises total equity at US$1,397 million. With assumption of net debt of US$1,871 million, the enterprise value of the transaction is US$3,268 million. The transaction will result in a gain of approximately US$470 million, which will increase the net asset value of each GHK shares by US 5.5 cents or HK 43 cents.Teachers' next CEO, Jo Taylor, said he wants to build the organization's brand name across the world and deals like this sure help it do so.
The purchase will be made in two tranches, with the first guaranteed tranche of at least 24.5% for US$342 million expected in September, and a second tranche of up to 35% in total expected by December of 2019. Additional incentive payments will be paid on achievement of certain profitability level of Dream Cruises and delivery of each of the Global Class ships.
"Dream Cruises is the premium brand for the fast growing Asian-sourced cruise passenger, with the vision that they will be able to cruise globally in all regions of the world with Dream Cruises,” said Tan Sri KT Lim, Chairman and CEO of GHK. “The investment by TPG and Ontario Teachers’ will help Dream Cruises to have the youngest and technologically most advanced fleet of quality German built cruise ships with legendary Asian service. And we are delighted to partner again with TPG as we did on Norwegian Cruise Line Holdings Ltd. in 2008,” he added.
“Dream Cruises is an iconic and innovative brand with a strong product offering that is well positioned in an attractive industry which will benefit directly from rising Asian wealth and outbound tourism,” said Ganen Sarvananthan, Co-Managing Partner of TPG Capital Asia. “TPG Capital Asia and TPG Growth are delighted to partner again with Genting HK and Ontario Teachers' in developing an Asian cruise brand, leveraging the years of experience that Genting HK has had in this sector. We look forward to contributing in our own way to this partnership.”
“The investment is a testament of Ontario Teachers’ positive view on longer term growth in Asia and is part of our continued drive to expand our global footprint by strengthening our local presence in Asia. It is an excellent example of our commitment to work alongside quality partners that are highly experienced in investing and operating in the region,” said Ben Chan, Regional Managing Director, Asia Pacific at Ontario Teachers’.
The investment is expected to close later in 2019, subject to customary closing conditions and regulatory approvals.
Below, Sujoy Bose, managing director and chief executive officer, NIIF, gave a keynote address back in 2017 at TiE ISB which is well worth listening to.