Canada’s OMERS buying into Azure Power in big-ticket India bet

 Canada’s OMERS buying into Azure Power in big-ticket India bet

Canadian pension fund Ontario Municipal Employees Retirement System (OMERS) is set to buy a fifth of a renewable energy company in what could be its biggest India investment to date.

OMERS, which lags behind bigger peers Canada Pension Plan Investment Board and Caisse de dépôt et placement du Québec (CDPQ) in terms of the India exposure, is buying a 19.36% stake in Azure Power Global Ltd from existing shareholders, according to a disclosure by the Competition Commission of India.

OMERS will spend $219 million to buy the stake from International Finance Corporation, the World Bank’s private-sector investment arm, and an infrastructure fund managed by IFC, the pension fund said in a separate statement.

“This agreement to invest in Azure Power demonstrates OMERS strong global interest in high-quality renewable power and energy transition assets, as well as our interest in India as an investment destination and Asia-Pacific more broadly,” said Annesley Wallace, executive vice president and global head of OMERS Infrastructure.

New York-listed Azure’s controlling shareholder is CDPQ, which owns a 50.36% stake.

For OMERS, Azure will likely be its single-largest investment in India so far. Its previous significant deals in India involve an investment of $122 million (Rs 870 crore) in 2019 to buy a 22.4% interest in IndInfravit, the infrastructure investment trust of L&T Infrastructure Development Projects Ltd. It is also picking up a minority stake in an Indian airport holding company created by Canadian investment firm Fairfax for an estimated $130 million.

The OMERS deal comes barely months after Azure sold its non-core solar rooftop portfolio to a fund managed by EverSource Capital.

CDPQ had first bet on Azure in late 2016. This marked CDPQ’s first India deal and came shortly before Azure listed on the New York Stock Exchange. The pension fund made additional investments in 2018, 2019 and last year. Overall, it would have invested upwards of $320 million in Azure. Its stake is now valued around $600 million.

Azure Power was set up in 2008 and has a solar power capacity of 7 gigawatts. This includes 2 GW of operational projects. The remaining are either under construction or have been awarded to the company.

*This article has been updated to include comments by OMERS.

Sumit Upadhyaya

The Capital Quest