Australia's largest superannuation fund has signed an agreement with the Indian sovereign wealth fund to invest up to US $1 billion in infrastructure opportunities and is taking a shareholding in the fund manager.
AustralianSuper made an initial investment of US $250 million and the right to co-invest a further US $750 million in future opportunities. It will also become a shareholder in National Investment and Infrastructure Fund (NIIF)'s investment management company.
Ontario Teacher's Pension Plan has come on board with a similar investment at the same time.
AustralianSuper chief investment officer Mark Delaney said India's burgeoning infrastructure market is among the largest in Asia, which presents many opportunities for investment.
"We are pleased to have entered into this agreement with the NIIF Master Fund and to be shareholders of National Investment and Infrastructure Fund Limited and look forward to participating in a strong pipeline of projects across a range of sectors," Delaney said in a statement.
NIIF was set up and seeded by the Indian government in 2015 and now has US $4 billion invested in Indian infrastructure through its three funds. It is underpinned by the government but owned by investors which include public and private institutions from around the world.
AustralianSuper and the Canadian pension fund's investment is in the third close of NIIF's master fund whose other investors are the Indian government, Abu Dhabi Investment Authority (ADIA), Temasek, HDFC Group, ICICI Bank, Kotak Mahindra Life Insurance and Axis Bank.
The master fund invests in core infrastructure equity with focus on India's transportation, energy and urban infrastructure. It now has US $1.8 billion in assets under management and a co-investment pool of US $2.5 billion
The fund's tenure is 15 years and it is denominated in Indian Rupees.
India needs a US $1 trillion investment in its infrastructure, according to Confederation of Indian Industry.
Earlier this month, IFM Investors chief executive Brett Himbury said the industry-super-owned fund manager is not yet looking for opportunities in India.