NEW DELHI : India on Wednesday approved Canada’s Fairfax Financial Holdings Ltd’s proposal to invest ？15,000 crore in infrastructure projects through its local arm, boosting the government’s efforts to kick-start its ambitious ？6 trillion infrastructure asset monetization programme.
Anchorage Infrastructure Investment Holding Ltd, set up by Fairfax, will eventually become its flagship investment vehicle for airports and other infrastructure investments in India. Fairfax plans to transfer its shares in Bangalore International Airport Ltd (BIAL) to Anchorage and infuse more capital into the holding company by bringing in more investors, showed the 2020 annual report of the Toronto-based Fairfax India Holdings Corp. India-born billionaire Prem Watsa is the chairman of Fairfax.
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Fairfax India has a 54% stake in BIAL, which runs the Kempegowda International Airport in Bengaluru, one of India’s busiest. Siemens Projects Ventures owns 20% of the airport operator, while Karnataka State Industrial and Infrastructure Development Corp. Ltd and Airports Authority of India hold 13% each.
As part of the investments, Anchorage will receive ？950 crore from an arm of OAC, which runs 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 a deal with Fairfax to invest about $130 million to acquire from Fairfax India an 11.5% stake in Anchorage on a fully diluted basis.
Fairfax also has plans for an eventual 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 will be a significant boost to the recently announced national monetization pipeline (NMP).
“Anchorage Infrastructure Investment is proposing to make downstream investment in some of the sectors covered under the NMP," according to the statement. It said the investment will considerably substantiate the Indian government’s plan to develop world-class airports and transport-related infrastructure through private partnerships.
The government intends to raise ？88,000 crore this fiscal by leasing out roads, railways, airports, sports stadiums, power transmission lines and gas pipelines to private operators. It will help raise funds for further infrastructure investments in the form of recycling of capital. Infrastructure investment is a key element of the government’s economic recovery strategy, but the biggest challenge is finding long-term capital required in this industry where projects have long gestation periods.
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Experts said there would be no dearth of investor interest if the initial projects are packaged the right way and are rolled out in a hassle-free manner.
“Assets in the NMP are already operating and are revenue earning, and hence banks would be happy to finance projects, unlike greenfield projects which may entail uncertainties around land acquisition and environment-related issues. Assets held by professionally managed enterprises in sectors like power transmission and oil and gas are expected to see robust investor interest," said Abhaya Agarwal, partner, infrastructure practice, EY India.
The government is also keen to attract long-term financing for infrastructure projects from investors such as pension and sovereign wealth funds. Tax exemption is given on earnings from infrastructure investments made till March 2024. The income tax department earlier this year approved tax relief to several funds, including Canada’s OMERS and others from the UK and Australia, on infrastructure investments.
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