CPPIB's Big Investment in India's NIIF
National Investment and Infrastructure Fund (NIIF) of India and Canada Pension Plan Investment Board (CPPIB) today announced an agreement for CPPIB to invest up to US$600 million through the NIIF Master Fund. The agreement includes a commitment of US$150 million in the NIIF Master Fund and co-investment rights of up to US$450 million in future opportunities to invest alongside the NIIF Master Fund.Back in August, I wrote a comment about how AustralianSuper, Australia’s largest superannuation fund, and Ontario Teachers’ Pension Plan each signed agreements for investments of up to USD 1 billion with the NIIF Master Fund.
With CPPIB’s investment, NIIF Master Fund now has US$2.1 billion in commitments and has achieved its initially targeted fund size. In addition, NIIF Master Fund investors have co-investment rights of US$3 billion, which will enable the NIIF Master Fund to invest at the scale required for India’s large infrastructure requirements. The NIIF Master Fund invests equity capital in core infrastructure sectors in India, with a focus on transportation, energy and urban infrastructure.
CPPIB joins Abu Dhabi Investment Authority, AustralianSuper, Ontario Teachers’ Pension Plan, Temasek, Axis Bank, HDFC Group, ICICI Bank and Kotak Mahindra Life Insurance as investors in the NIIF Master Fund, alongside Government of India.
CPPIB will also become a shareholder in National Investment and Infrastructure Fund Limited, NIIF’s investment management company.
Sujoy Bose, Managing Director & Chief Executive Officer of NIIF, said: “We are delighted to welcome CPPIB as an investor in the NIIF Master Fund and as a shareholder in our investment management company. CPPIB is a prominent and established investor in India, and their investment demonstrates the alignment of the NIIF Master Fund’s investment strategy with what large international investors seek in the infrastructure sector in India. With this fourth close of the NIIF Master Fund, we are pleased that the fund has achieved its initial target size of US$2.1 billion with domestic and international investors of the highest reputation and quality. We thank all our investors, and the Government of India, particularly the Ministry of Finance and the Ministry of External Affairs, for their strong support.”
Scott Lawrence, Managing Director, Head of Infrastructure, CPPIB, said: “The opportunity to invest in, and alongside, NIIF complements our existing direct investment strategy in Indian infrastructure. Through this investment in the NIIF Master Fund, we are also able to deploy capital in additional projects and sectors across the country, providing further long-term opportunities for CPPIB to invest in Infrastructure in India.”
About NIIF
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. NIIF Limited manages over US$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.
About CPPIB
Canada Pension Plan Investment Board (CPPIB) is a professional investment management organization that invests the funds not needed by the Canada Pension Plan (CPP) to pay current benefits in the best interests of 20 million contributors and beneficiaries. In order to build diversified portfolios of assets, CPPIB invests in public equities, private equities, real estate, infrastructure and fixed income instruments. Headquartered in Toronto, with offices in Hong Kong, London, Luxembourg, Mumbai, New York City, San Francisco, São Paulo and Sydney, CPPIB is governed and managed independently of the CPP and at arm’s length from governments. At September 30, 2019, the CPP Fund totaled $409.5 billion.
For more information about CPPIB, please visit www.cppib.com or follow us on LinkedIn, Facebook or Twitter.
Now we learn CPPIB is also investing US$600 million through the NIIF Master Fund. The agreement includes a commitment of US$150 million in the NIIF Master Fund and co-investment rights of up to US$450 million in future opportunities to invest alongside the NIIF Master Fund.
Go back to my discussion with Ron Mock earlier this week where he told me when it comes to Asia and Latin America, "we need to know out limitations and invest with trusted partners."
Here is a perfect example. OTPP, AustralianSuper, CPPIB, Axis Bank, HDFC Group, ICICI Bank and Kotak Mahindra Life Insurance are all investors in the NIIF Master Fund, alongside Government of India.
There is simply no way Canada's mighty pensions can invest in the required scale they're looking for in India without going through the NIIF Master Fund backed by the Government of India.
Why invest such massive sums in India's infrastructure? That's where growth will be over the coming decade(s). India has its fair share of problems but it also has a relatively young population which is hungry to be part of the growing middle class.
That means more cars, more tolls, more insurance and banking products, etc. Canada's large pensions know this and want to make sure they are well positioned in public and private markets to capture this growth in India's growing economy.
Again, go back to read last week's comment on how CDPQ, CPPIB and OTPP are recently signed big infrastructure deals. Even more than real estate, infrastructure is a long dated asset class and matches nicely with pensions' long dated liabilities. It's not meant to be exciting and sexy, it's meant to be extremely boring, much like watching paint dry.
Infrastructure is critical to India and pretty much every other country in the world. Good infrastructure takes years to plan, build and operate but if done correctly, it pays dividends for decades.
The added advantage in emerging markets is infrastructure doesn't just grow at the rate of GDP like in developed markets, it grows even more as more and more people enter the middle class translating into more cars on the roads paying more tolls.
Think about it this way. In North America, most households have two if not more cars but in emerging markets, only a lucky few who are part of the growing middle class can afford such a luxury but if more women enter the workforce, they too will be buying their own car for work and leisure.
This all translates into more activity on highways, ports, airports and other vital infrastructure assets and this is why global investors are clamoring for a piece of India's growing infrastructure pie.
Let me end this comment on a somewhat sour and sad note. Today, the pension world learned that CPPIB's former CEO Mark Wiseman was ousted from BlackRock for failing to disclose a personal relationship.
Several people emailed me this morning as soon as they heard the news but the first one was Mark Wiseman himself sharing this with me (added emphasis is mine):
"In recent months, I engaged in a consensual relationship with a colleague without reporting it, as required by BlackRock’s workplace policies. This was a mistake and I take full responsibility.I wish Mark well as he goes through this difficult time and I'm sure he will come out of it a lot stronger. He did the right thing taking full responsibility for not disclosing this relationship.
I will be spending time with family and friends in the weeks ahead, as I consider next steps professionally."
Someone else I respect called me later this afternoon to tell me he thinks "BlackRock handled this all wrong and could have dealt with it very quietly but instead succumbed to the 'Me Too' hysteria."
I respectfully disagreed. The way BlackRock handled this in a very public manner putting out a memo (more like leaking out internal memos) tells me two things. First, Larry Fink wasn't pleased after learning this (read his internal memo here) and second and more importantly, he wanted to send a clear message to all BlackRock employees: respect the firm's policies or you will be ousted no matter who you are.
Anyway, Mark Wiseman made a mistake and takes full responsibility. I don't want to go over this as I can share a boatload of stories of indiscretions that took place at the Caisse, PSP and other places I've worked at. Men and women make mistakes and it's really important to use your judgment when getting involved with someone from work or you will end up regretting it. If there are workplace policies, you need to to respect them. Full stop.
What will happen to André Bourbonnais, the head of BlackRock’s long-term private capital team? I have no idea what is going through André's mind except that he's disappointed to see his friend and mentor leaving BlackRock because of this and he will likely need to reevaluate his future at the firm.
As for Mark Wiseman, he needs to take care of himself and his family now. Despite what happened, he has had an unbelievable career, has incredible qualifications and there's no doubt in my mind this isn't the final chapter for MDW.
I will respectfully ask everyone to refrain from gossiping because it's not just inappropriate and disrespectful, it's highly hurtful to some of the innocent people involved. The man made a mistake, he owns it, let him be. When Mark is ready to move on, he is more than welcome to share his thoughts on my blog as they pertain to pensions and investments.
That's pretty much all I have to say about Mark Wiseman leaving BlackRock. The only reason why I addressed it here is so people can stop emailing or calling me about it (I'm not interested).
Below, in line with its election promise of Rs 100 trillion investment in the infrastructure sector by 2024, the NDA government would be targeting low-hanging fruits, such as Metro projects, inland waterways, natural gas grids and airport privatisation, to give a fillip to private sector investment in the first few months of its tenure.
Also, Prime Minister Narendra Modi recently invited global businesses to invest in India, saying historic reduction in corporate tax rates by his government creates a golden opportunity and promised more measures to improve business climate. Watch the panel discussion.
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