Saudi Arabia’s PIF looks to invest in India’s infrastructure sector
Saudi Arabia’s Public Investment Fund, which has investments in SoftBank Vision Fund and Uber, plans to increase AUMs from around $230 billion to over $400 billion by 2020
New Delhi: The Public Investment Fund (PIF) of Saudi Arabia, which has invested in SoftBank’s Vision Fund and ride-hailing firm Uber, is looking to invest in India’s infrastructure sector.
“They are trying to create an investment portfolio that lasts beyond oil,” said a person aware of the sovereign wealth fund’s plans, requesting anonymity.
Saudi Arabia is a crucial source of energy for India and hosts a number of expatriate Indians. PIF, which acts as the Kingdom’s main investment arm, plans to increase assets under management from around $230 billion to over $400 billion by 2020. Building “strategic economic partnerships” is among its key objectives.
Another person, who also didn’t want to be named, confirmed PIF’s interest in India’s infrastructure sector.
India has been seeking Saudi investment in its infrastructure sector. The efforts have gained traction, with the world’s biggest oil producer, Saudi Arabian Oil Co., or Saudi Aramco, partnering with a consortium of Indian state-run companies to set up the largest global refinery and petrochemical complex at Ratnagiri in Maharashtra at an investment of $44 billion. Saudi Aramco will enter fuel retailing in India, where energy demand is expected to grow at 4.2% over the next 25 years.
Queries emailed to PIF on Monday remained unanswered.
This comes against the backdrop of growing interest from sovereign wealth funds to invest in India. Mint reported on 18 March 2017 that the Australian Government Future Fund plans to invest in the Indian infrastructure space, including roads, telecommunications and clean energy.
Sovereign wealth funds are also preferred for their so-called patient capital, which seeks modest yields over time. Some of the active sovereign wealth funds are Investment Corporation of Dubai, Singapore’s GIC Pte Ltd, Abu Dhabi Investment Authority and Abu Dhabi’s Mubadala Development Co.
“Public Investment Fund has always remained quiet about India. Of the sovereign wealth funds from West Asian oil economies, they have been the most low-key,” said a third person, who didn’t want to be named.
This interest comes at a time when the NDA government has set in play a new integrated infrastructure programme that involves building of roads, railways, waterways and airports. India plans invest as much as Rs5.97 trillion in creating and upgrading infrastructure in the current financial year.
Experts say that investors such as PIF are required to fuel India’s economic growth.
“Any investor from outside is needed and welcome for India’s infrastructure growth. We need investors and not fund providers,” said Sanjay Garg, partner and leader, capital projects, at PricewaterhouseCoopers.
According to the Economic Survey presented in January, India will face a $526 billion infrastructure investment gap by 2040. Infrastructure development has been one of the focus areas of the Narendra Modi government. Starting with an allocation of around Rs1.81 trillion in 2014-15, expenditure towards infrastructure reached Rs4.94 trillion in 2017-18.
Also, the government’s plan to monetize publicly funded, operational national highways through the toll-operate-transfer (TOT) model has yielded results with Macquarie Group, the Sydney-based infrastructure asset management company, earlier this year winning the rights to manage 648km of national highways by bidding Rs9,681.5 crore in an auction.
The government has also crafted ambitious plans such as Sagarmala and Bharatmala to improve its transport infrastructure. While the total investment for the Bharatmala road project was pegged at Rs10 trillion—the largest ever outlay for a government road construction scheme—the country has envisaged Rs8 trillion of investment until 2035 under the Sagarmala port programme.