Diversified group Piramal Enterprises today entered into an alliance with Dutch pension fund asset manager APG Asset Management with a target to invest USD 1 billion over the next three years in infrastructure companies in India.
The two partners have agreed to commit USD 375 million each for investments under this alliance.
"Piramal Enterprises Ltd (PEL) and APG Asset Management today announced a strategic alliance for investing in rupee dominated mezzanine instruments issued by infrastructure companies in India with a target investment of USD 1 billion over the next 3 years," the two companies said in a joint statement.
Commenting on the development, PEL Chairman Ajay Piramal said: "This is an opportune time to be creating an aligned pool of capital to target what we believe to be very compelling funding opportunities in the infrastructure sector in India."
The alliance is consistent with PEL's long-term plan and vision of playing a contributing role towards investments that promote growth, he added.
"The strategy of the alliance to focus on mezzanine investments in infrastructure projects in India ticks the right boxes for our pension fund clients in terms of risk profile and high cash-flow visibility," APG CEO Dick Sluimers said.
This pool of capital will focus on operational and near completion projects with limited execution risks and high visibility of cash flows coming from a portfolio of projects, the statement said.
Mezzanine financing is a hybrid of debt and equity financing that is typically used to finance the expansion of existing companies. It is basically debt capital that gives the lender the rights to convert to an ownership or equity interest in the company if the loan is not paid back in time and in full.
Shares of Piramal Enterprises were today trading at Rs 637.35 per scrip in the afternoon trade on BSE, up 0.43 per cent from its previous close.
