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Indian-Dutch JV to the rescue
Match on values, culture and business outlook
Gita Dhungana 4 Sep 2014
 
Aerts: India is an attractive investment destination  

What will be your key focus areas/sectors?


The alliance seeks to make investments across a host of infrastructure sub-sectors, such as roads, ports, airports, (renewable) power, telecom towers and social infrastructure. We will focus on operational and near completion projects with limited execution risk and high visibility of cash flows.

 

Are there any plans to invest in greenfield projects on a selective basis? If yes, which sector would interest you?


The alliance takes a sector agnostic approach. Even though the focus is on operational projects, we would also look at greenfield projects, predominantly as part of a broader portfolio of assets which is already generating stable cash flows.


Any challenges or risks you foresee that need to be continuously checked?


Market, regulatory and operational risks will always be there and require continuous monitoring. The strategy of the alliance to focus on mezzanine investments will provide some downside protection to our investments through adequate security cover and strong governance rights.

 

Why did Piramal decide to team up with APG in this venture?


A (Desai): At Piramal, when we look for partners, we look for a match on values, culture and business outlook. In APG, we found a match on all counts. APG’s culture and values are very similar to our own. We also found that their outlook on the infrastructure sector in India was very similar to our own. Both of us believe that the sector currently is at an inflection point, in need of funds, and that there is a clear need to create a separate category of capital – i.e., mezzanine funding. Given all of the above, it was actually a very easy decision to tie up with APG. In addition, APG brought to the table a wealth of understanding and experience in the infrastructure sector generally and in particular in India. They have been investors in India since 2007 and have an in-depth understanding of the sector, which adds and brings an additional dimension to our understanding of the sector.

 

 
Desai: We believe that the sector is at an inflection point  

The fund represents APG’s single largest commitment to India’s infrastructure sector to date. What drove you to make this move?


A (Aerts): We see India as an attractive investment destination for long-term investors seeking to enhance the overall risk-adjusted return of their investment portfolio. With the new government in place, the outlook for Indian infrastructure has improved significantly. In the presence of a conducive policy environment, the infrastructure sector is expected to be one of the key beneficiaries of the reform measures that are in step with the government’s commitment to revive India’s economic growth.

 

Why did you decide to partner with Piramal instead of doing a solo venture?


A (Aerts): We believe that long-term partnerships are key to a successful implementation of our investment strategy. This alliance will benefit from the credibility and expertise provided by the partners. In addition, we think it is important to have local people on the ground whose knowledge and network we can leverage on when making investment decisions. Piramal has demonstrated strong sourcing and risk underwriting capabilities and we are very pleased to be partner with them in this venture.

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