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Brookfield Asset Management is open to evaluating investing in ports and airports in India under its infrastructure portfolio, which currently comprises telecommunication towers, pipelines, data centres and a hotel.
In India, the Toronto-based asset manager has direct exposure in real estate, renewable energy, infrastructure and also makes investments through its private equity arm. Infrastructure, admittedly, forms the largest chunk in its portfolio with assets worth $11 billion.
Globally, the asset manager has the stated position of continuing to favour infrastructure over real estate as infrastructure has the potential to outperform in down markets. Of its total global assets under management of over $800 billion, its infrastructure assets account for $161 billion.
It is looking at potential joint ventures in the airport and port sectors in India.
There are huge opportunities coming up in the airports sector in India with the Centre having set the target to take the number of operational airports to 220 from 148 now over the next two years through the public-private partnership.
AAI’s investment plan
The Airports Authority of India plans to invest about $3.5 billion over the next five years in upgrading infrastructure at airports and has currently leased out eight of its airports under the PPP model. Under the National Monetisation Pipeline, 24 more airports are expected to be leased out over the next 2-3 years. Earlier this year, Civil Aviation Minister Jyotiraditya Scindia said that about $12 billion will be spent on airport infrastructure in the country with both the State and private sector participating in it.
For Brookfield, this presents an attractive opportunity as it seeks to increase its exposure in the infrastructure of one of the fastest-growing economies in the world. The Canadian asset manager has not seriously looked at the airport sector so far in India due to lower proportion of non-aero revenue compared to aero revenue which accounted for over 75 per cent of the total income till about two years ago. This is true, especially for the smaller airports in non-tier 1 cities. However, with private players taking over the operation of airports, this has changed and share of revenue from non-aeronautical sources is rising, making it potentially more attractive for Brookfield.
Port sector
The port sector is also seeing private investments with the Ministry of Ports handing over terminals at major ports to private parties on a long-term concession basis. There is a pipeline of 81 such projects, of which several have been awarded and others in the process of tendering or development phase. Under the Sagarmala programme, there are about 800 projects identified with an estimated investment of ₹5.5-lakh crore and this includes not only upgrading existing ports but also setting up new ports and terminals.
With the government encouraging private sector investments in the sector, it is being seen as a lucrative infrastructure play by global asset managers such as Brookfield. It already successfully operates port terminals in Australia under long leases.
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