Funds may put $25 billion a year in India infrastructure, says Ambit

Construction work of a flyover along the River Ganges in seen in Patna, Bihar, India on February 25, 2021. Photographer - Anindito Mukherjee/Bloomberg

Global pension and sovereign wealth funds could invest around $25 billion a year in Indian infrastructure, according to investment bank Ambit Capital.

Funds appreciate the better regulatory framework, growth in India and commitment to the climate change requirement for the net-zero carbon policy, Rahul Mody, managing director and co-head of investment banking at Ambit, said in a Bloomberg Television interview on Friday.

“Domestic investors, institutional investors and high net worth individuals and family offices will continue to invest, but I would say a majority of these investments will come from global funds,” he added.

Mody cited investment infrastructure trusts, known as InvITs, as a type of vehicle that has attracted global funds. Initiated by the government several years ago, InVITs offer tax incentives and concessions as well as a governance and capital structure that is robust, and restricts leverage, he said.

In terms of subsectors, roads and renewable energy have attracted the most capital, Mody said. Investors have also shown interest in telecommunication towers, digital infrastructure, data centers, fiber and power transmission, he said. Hydrogen, energy storage and railways could see significant investment, Mody added.