Piramal Enterprises and Dutch pension fund manager APG Asset Management have entered into an alliance to invest $1 billion (about ₹6,000 crore) in mezzanine instruments issued by infrastructure companies in India over the next three years.

Mezzanine finance comprises both debt and equity characteristics.

APG manages pension assets of €375 billion as of June 2014, which is 30 per cent of all Dutch collective pension schemes. Both the partners have committed an initial investment of $375 million (about ₹2,250 crore) each.

Ajay Piramal, Chairman, Piramal Enterprises, in a statement, said: “This is an opportune time to be creating an aligned pool of capital to target what we believe to be very compelling funding opportunities in the infrastructure sector in India. The alliance is consistent with Piramal Enterprises’ long-term plan and vision of playing a contributing role towards investments that promote growth.”

The focus will be on operational and near completion projects with limited execution risks and high visibility of cash flows coming from a portfolio of projects. The access to this source of capital will enable infrastructure players in India to retain their equity interest in the assets, while raising long-term capital to help them complete their on-going projects.

Dick Sluimers, CEO of APG, said: “The strategy of the alliance to focus on mezzanine investments in infrastructure projects in India ticks the right boxes for our pension fund clients in terms of risk-return profile and high cash flow visibility.”

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