Government clears 15,000 crore FDI plan to strengthen asset rental policy
NEW DELHI : India approved the investment proposal of Canadian Fairfax Financial Holdings Ltd on Wednesday ??15,000 crore in infrastructure projects through its local branch, bolstering the government’s efforts to launch its ambitious ??$ 6 trillion infrastructure asset monetization program.
Anchorage Infrastructure Investment Holding Ltd, created by Fairfax, will eventually become its flagship investment vehicle for airports and other infrastructure investments in India. Fairfax plans to move its shares in Bangalore International Airport Ltd (BIAL) in Anchorage and inject more capital into the holding company by attracting more investors, Toronto-based Fairfax India Holdings’ 2020 annual report showed. Corp., billionaire Indian born Prem Watsa is the chairman of Fairfax.
Fairfax India has a 54% stake in BIAL, which operates Kempegowda International Airport in Bangalore, one of the busiest in India. Siemens Projects Ventures owns 20% of the airport operator, while Karnataka State Industrial and Infrastructure Development Corp. Ltd and Airports Authority of India each hold 13%.
As part of the investments, Anchorage will receive ??950 crore from a branch of the OAC, which manages the Canadian pension fund OMERS Administration Corp., according to an official press release after the Cabinet Committee on Economic Affairs cleared the FDI plan. OMERS has entered into an agreement with Fairfax to invest approximately $ 130 million to acquire from Fairfax India an 11.5% interest in Anchorage on a fully diluted basis.
Fairfax is also considering a possible public listing of Anchorage in India, according to its 2020 annual report. Fairfax India did not respond to an emailed query.
The government statement said the investment would be a significant boost to the recently announced National Monetization Pipeline (NMP).
“Anchorage Infrastructure Investment proposes to make downstream investments in some of the sectors covered by the NPM,” the statement said. partnerships.
The government intends to increase ??88,000 crore of this tax by leasing roads, railways, airports, sports stadiums, power lines and gas pipelines to private operators. It will help raise funds for further infrastructure investments in the form of capital recycling. Investing in infrastructure is a key part of the government’s economic recovery strategy, but the biggest challenge is finding the long-term capital required in this industry where projects have long gestation periods.
Experts said investor interest would not be lacking if the initial projects were properly packaged and deployed without hassle.
“NMP’s assets are already functioning and generating income, so banks would be happy to finance projects, unlike entirely new projects which can lead to uncertainties regarding land acquisition and environmental issues. Assets held by professionally managed companies in sectors such as power transmission and oil and gas are expected to generate strong investor interest, ”said Abhaya Agarwal, Partner, Infrastructure Practice, EY India.
The government is also keen to attract long-term finance for infrastructure projects from investors such as pension funds and sovereign wealth funds. A tax exemption is granted on income from infrastructure investments made until March 2024. The income tax department earlier this year approved tax relief for several funds, including OMERS of Canada and Canada. others from the UK and Australia, on infrastructure investment.
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