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Brookfield overtakes Blackstone as largest private investor in India

Canadian alternative asset manager Brookfield Asset Management trumped US private equity firm Blackstone to emerge as the largest private capital investor in India in 2019, lifted by deals with Reliance Industries Ltd (RIL).Investments by Brookfield totalled nearly $6.28 billion last year across private equity and real estate, far outpacing the $2.38 billion in investments by Blackstone, according to deals tracker Venture Intelligence.

To be sure, for the four years through 2018, Blackstone had topped the list with investments of $4.34 billion, more than double Brookfield’s nearly $2.07 billion.That changed last year when Brookfield signed deals with billionaire Mukesh Ambani-controlled RIL. Brookfield made a $3.6 billion buyout of the telecom infrastructure assets of RIL’s subsidiary, Reliance Jio Infocomm Ltd. It was the largest ever deal in India made by a private equity investor.

Brookfield also invested more than $1.87 billion in RIL’s gas pipeline assets, East West Pipeline Ltd.The two investments, made through the infrastructure investment trusts (InvITs) of the companies, made up more than three quarters of Brookfield’s overall investments in the country in 2019.Last year’s deals catapulted Brookfield’s total investments in India to $8.3 billion in the five-year period through 2019, ahead of Blackstone’s $6.7 billion, shows data.Blackstone is currently the largest alternative asset manager in the world, with assets under management (AUM) of $571 billion spread across private equity, real estate, hedge funds and credit; Brookfield comes a close second with AUM of around $540 billion, according to data available on their websites.

One of the primary reasons for the increase in Brookfield’s India investments is linked to attractive yields offered by infrastructure assets in the country and the acceptability of InvITs, which have emerged as a preferred investment route for large institutional investors.“With the decline in yields globally, large global LPs (limited partners), sovereign wealth funds and GPs (general partners or private equity firms that manage private equity funds) are increasing their allocation to emerging markets and India has been a beneficiary of this development, seeing record inflows via direct investments by pension funds and large GPs, especially in the infrastructure and real estate asset classes,” said Vivek Soni, partner and national leader for private equity services at EY.“

Of particular note has been the increase in direct investments by pension funds and large GPs such as Brookfield and Fairfax that are headquartered in Canada. In the past five years, these Canadian investors have made direct investments of nearly $24 billion in India, of which $10.8 billion was invested in 2019, which was almost 2x of 2018,” he added.Besides the infrastructure deals, Brookfield’s major investments last year included its $563 million entry into the Indian hospitality sector through the acquisition of Hotel Leelaventure Ltd’s hotel properties and operations.It also acquired two wind farms from Hyderabad-based renewable energy firm Axis Energy Ventures for about $73 million.

Brookfield also paid about $109 million to acquire a prime Mumbai real estate asset from Scotland-based hotelier Sanjay Narang-owned Mars Enterprises and Hospitality Ltd.And, now the Canadian investor is also looking to make its mark in private equity too, an asset class it had so far shied away from in India.“Brookfield is gung-ho on the private equity opportunity in India.

They recently pumped around $200 million into non-bank lender IndoStar Capital,” a person, who advised Brookfield on a recent investment, said on condition of anonymity. “They had hired Aditya Joshi from PE firm Apax Partners last year and they are looking to do more PE deals in India. They are looking for investment opportunities of $200-300 million in size.”Brookfield raised $9 billion for its latest and largest private equity fund, Brookfield Capital Partners V, in November.

The private equity fund exceeded its initial target of $7 billion and was more than double Brookfield’s previous fund, which raised $4 billion in 2016.Last week, it announced the closing of its latest flagship global infrastructure fund with total equity commitments of $20 billion.Flush with capital, Brookfield’s investments in India are expected to grow further.“As Brookfield and other Canadian investors deepen their focus into sectors such as financial services, logistics infrastructure, renewables and commercial real estate, one can expect continued deal activity from the Canadians,” Soni said.

11 Feb 2020

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