Asset monetisation plan would attract global sovereign wealth funds, pension funds

New Delhi, Aug 23 (Mayank Nigam) Infrastructure sector experts have given thumbs up to the government’s Rs 6 lakh crore asset monetisation plan saying that the pool of assets has the ability to attract a diverse set of global investors including sovereign wealth funds and pension funds. “The National Monetization Pipeline is being closely tracked by global sovereign wealth funds, pension funds and infrastructure funds. As the underlying assets are operating, provide visibility of a regular cash flow stream and do not have development and construction risk, the assets are well suited for yield investors,” said Srishti Ahuja, Partner, Strategy & Transactions, EY India. Ahuja, however, said that the success of the program will also be dependent on the contractual framework.

“If the concessions are long term (at least 15 years) and if the risk allocation framework assigns risks in proportion to the underlying asset returns, the interest will be higher vis-à-vis a scenario where the two are mis-aligned, as an instance, where the investors bear the risk of capex approvals/capacity augmentation but their returns are capped,” she said. The assets lined up for monetisation are in the sectors of roads, ports, airports, railways, warehousing, gas & product pipeline, power generation and transmission, mining, telecom, stadium, hospitality and housing. The top five sectors (by estimated value) capture 83% of the aggregate pipeline value. These sectors include roads (27%) followed by railways (25%), power (15%), oil & gas pipelines (8%) and telecom (6%).

Launching the national monetisation plan (NMP), Finance Minister Nirmala Sitharaman on Monday said that the asset monetisation plan is aimed at tapping private sector investment for new infrastructure creation. Amit Kapur, Joint Managing Partner, J Sagar Associates said that 90% of the assets in the present pipeline belong to transportation, energy and real estate based facilities. “These assets will be attractive offerings since they are de-risked being existing, operating assets with proven revenue stream, avoiding construction risk with proven output/capacity,” said Kapur.