Green investment offers huge opportunities: Macquarie

Macquarie Asset Management, which plans to raise its third Asia fund soon, sees India as an important part of its Asia strategy, said Deep Gupta, managing director, Macquarie Asset Management.

“We continue to see India as a large part of our Asia strategy. We already have two Asia Series funds. Our (third) Asia Series Fund will invest in all geographies including India and I think it is fair to say that India is an active market for us.

Over the years, Macquarie has invested in several 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 statement of purpose and the actions we have taken over the years, you will see that sustainability plays a very important role. Our focus has been on green investing, and it is not limited to renewable energy For example, it could be in the waste management business,” Gupta said, adding that other recent developments are around digital infrastructure, including data centers, telecom towers and optical fiber infrastructure.

Gupta said the firm will continue to evaluate investments in Indian road properties. “We also continue to evaluate the roads. For a time, the government focused more on InvITs, and it was not very clear on the part of policymakers whether toll-operate-transfer (TOT) would be reintroduced as a program. But as you’ve seen, it has been, and there are currently three TOT bids going on. The roads have seen a strong rebound post Covid,” he said.

In March 2018, Macquarie emerged as the highest bidder for the first sale of National Highways Authority of India’s toll roads under the TOT model. 9,681 crore for nine projects.

While the company remains consistent on India, Macquarie sees increasing competition for infrastructure assets as a major challenge in deploying capital in India.

“If you look at renewable energy and infrastructure in general, globally, there has been a lot of liquidity for some time, and yields have remained low. However, investors continue to invest in real assets because they produce,” Gupta said.

“And the reason I mentioned that renewable energy and roads compete a lot is that both these sectors come with some distinctive features. They usually have concessions of 20-30 years. Given their nature, they also have a reliable yield profile. Renewables, for example, offer long-term take-or-pay contracts. So, effectively, these two properties were highly sought after by the investors in the past. And now you are seeing a lot more direct investments by pension funds and sovereign wealth funds, apart from third party funds. That is why there is more competition given a general rush towards infrastructure assets,” he said.