Green investments offer big opportunities: Macquarie
Premium- The firm plans to raise its third Asia fund soon, and sees India as a key part of its Asia strategy
MUMBAI : Australia’s Macquarie Group, which has been investing in India for more than a decade, sees green investments and digital infrastructure as key focus areas for the investment firm across Asia and India, a senior official said in an interview.
Macquarie, which plans to raise its third Asia fund soon, sees India as a key part of its Asia strategy, said Deep Gupta, managing director, Macquarie Asset Management.
“We continue to look at India as a large part of our Asia strategy. We already have two Asia series funds. Our (third) Asia series fund would invest across geographies, including India, and I think it’s fair to say that India is an active market for us," Gupta said.
Over the years, Macquarie has invested across multiple infrastructure assets in India, including toll roads, renewable, thermal and hydropower plants. But as a pan-Asia strategy, the firm has focused on green investments and digital infrastructure, even as it continues to evaluate asset classes such as roads.
“If you look at Macquarie’s purpose statement and the action that we have taken over the last few years, you will see that sustainability plays a very important role. Our focus has been on green investments, and that’s not just limited to renewable energy. It could, for example, be in the waste management business," Gupta said, adding that the other more recent developments have been around digital infrastructure, including data centres, telecom towers and optical fiber infrastructure.
Gupta said the firm would continue to evaluate investments in Indian road assets. “We continue to evaluate roads as well. For a certain time, the government focused more on InvITs, and it wasn’t very clear from the policymakers whether toll-operate-transfer (TOT) as a programme would be relaunched. But as you have seen, it has been, and three TOT bids are currently underway. Roads have seen a strong rebound post covid," he said.
In March 2018, Macquarie emerged as the highest bidder for the National Highways Authority of India’s first sale of toll roads under the TOT model, bidding ₹9,681 crore for nine projects.
While the company continues to be bullish on India, Macquarie sees increasing competition for infrastructure assets as a key challenge in deploying capital to India.
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“If you look at renewable energy and infrastructure in general, globally, there’s been a lot of liquidity for a while, and the yields continued to be low. However, investors continue to invest in real assets as they provide yield," Gupta said.
“And the reason I mentioned renewables and roads having a lot of competition is that both these sectors come with a few unique characteristics. They usually have 20-30 year concessions. Given their nature, they have a reliable yield profile as well. Renewables, for example, provide long-term take-or-pay contracts. So, effectively, these two assets were much more sought after by investors in the past. And now you are seeing a lot of direct investment by pension funds and sovereign wealth funds, in addition to the third-party funds. That’s what is leading to more competition, given a general rush towards infrastructure assets," he said.
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