NEW DELHI : Saudi Arabia’s sovereign wealth fund, Public Investment Fund (PIF), has tasked Bain and Company with consolidating an Indian strategy as part of its plan to tap into various investment opportunities in the infrastructure sector, two people familiar with the matter said. development.
PIF, the kingdom’s main investment arm, has around $600 billion in assets under management, and building “strategic economic partnerships” is one of its main goals. The fund is seeking opportunities in India after high global crude oil prices buoyed Saudi revenue, with the world’s largest oil company, state-owned Saudi Arabian Oil Co. (Saudi Aramco), targeting investments in the green energy space.
“PIF is bullish on India and is looking to invest in sectors such as real estate in the broader physical infrastructure space,” said one of the two, seeking anonymity.
As the Indian government seeks to attract investment from ₹111,000 billion for 7,000 infrastructure projects, New Delhi prefers sovereign funds, or impact investors, who invest over the long term to generate modest returns.
In the Union budget for fiscal year 21, India had extended tax exemptions to sovereign wealth funds on their income from infrastructure investments in India for fiscal year 24. “In order to encourage the investment by foreign government sovereign wealth funds in priority sectors, Finance Minister Nirmala Sitharaman has proposed granting 100% tax exemption on interest, dividends and capital gains on investments made in infrastructure and other sectors by March 31, 2024, and with a minimum lock-in period of three years,” the government said in a February 2020 statement.
The government also increased capital spending for FY23 by a record 35% ₹7.5 trillion, with the majority of capital expenditure to support infrastructure projects.
SWFs active in infrastructure in India include Abu Dhabi Investment Authority, Mubadala Investment Co. of the United Arab Emirates, and GIC Holdings Pte Ltd and Temasek Holdings Pte of Singapore.
Email queries to spokespersons for PIF and Bain and Company on Sunday evening went unanswered until press time.
PIF has been looking to invest in India and has been looking for opportunities including buying a stake in the green power business of Tata Power Co. Ltd. A consortium led by the world’s largest asset manager BlackRock and Mubadala has agreed to invest ₹4,000 crore for a 10.53% stake in Tata Power Renewables, the companies said in a joint statement earlier this month.
More than 12 foreign investors have so far secured tax exemptions for infrastructure investment in India under a provision introduced in the Finance Act 2020, which came into force on April 1, 2021. These include Singapore-based sovereign wealth funds Chiswick Investment Pte. Ltd, Stretford Investment Pte. Ltd, Dagenham Investment Pte. Ltd, Anahera Investment Pte. Ltd, Bricklayers Investment Pte. Ltd, and the United Arab Emirates sovereign wealth fund MIC Redwood 1 RSC Ltd. Canadian and Australian pension funds have also obtained tax relief under this provision.
India is working on the largest clean energy program in the world. At the COP-26 summit in Glasgow last November, it announced plans to increase power generation capacity from non-fossil fuels to 500 gigawatts by 2030 and pledged to achieve net emissions zero carbon by 2070.