Australian superannuation funds exploring Indian green energy deals

These funds, also referred to as “Super Fund" have not invested directly so far in India’s green energy space, and dealmakers are seeing growing interest from them on the back of the country’s green energy transition trajectory. “We are seeing a lot of interest from Australian superannuation funds to invest in India’s renewable energy space," one of the two people cited above said.

Typically, these funds follow global pension funds into new markets. The interest in India follows rising investments in the country’s infrastructure by Canadian pension funds such as Canada Pension Plan Investment Board (CPPIB), Caisse de dépôt et placement du Québec’ (CDPQ), Public Sector Pension Investment Board (PSP Investments) and Ontario Municipal Employees’ Retirement System (OMERS).

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India fits the Australian funds’ risk profile given that the renewable energy market here has matured from the early-risk stage. These superannuation funds represent the so-called ‘patient capital’, which seeks modest yields over time. This also comes at a time when several green energy deals are in play as reported by Mint.

While AustralianSuper manages A$341 billion (about $233 billion) in over 3.4 million members’ retirement savings, UniSuper has $139 billion in funds under management for 647,000 members. Hostplus manages $115 billion in funds under management for 1.8 million members.

AustralianSuper is an investor in National Investment and Infrastructure Fund (NIIF) Master Fund. NIIF is sponsored by the Indian government, which holds a 49% interest in it and manages around $5 billion of equity capital commitments.

“UniSuper continues to look for opportunities to invest in companies that support decarbonization, while providing attractive returns for our members," an UniSuper spokesperson said in an emailed response, adding that its investments team always looks for quality investments “with the potential to help members grow their super over the long term, all while keeping downward pressure on fees".

An Australian High Commission spokesperson in New Delhi said in an emailed response to Mint's queries, “Already Australia’s fourth-largest export market in 2024, India will be the world’s third-largest economy by the end of the decade. Australia sees great opportunity with India-and we encourage greater two-way trade and investment between our two countries."

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The two countries inked an interim trade agreement—Australia-India economic cooperation and trade agreement (ECTA)—in December 2022 and are now negotiating a comprehensive economic cooperation agreement (CECA).

Queries emailed to the spokespersons of AustralianSuper and Hostplus remained unanswered till press time.

The development comes in the backdrop of the Indian government actively courting these investors, as it plans to add 50 gigawatt (GW) of green energy capacity annually to reach 500GW renewable capacity by 2030. India has an installed renewable energy capacity of 180.79GW, which includes 73.31 GW solar and 44.73GW of wind power. All this power will help meet the electricity demand of the country that has been growing exponentially.

India’s commerce and industry minister Piyush Goyal met Australia’s leading super funds during his visit to the country last month, where he also co-chaired the 19th India-Australia Joint Ministerial Commission meeting with Australia’s trade and tourism minister Don Farrell.

“Excellent meeting with Australia’s leading Super Funds, where we explored significant investment opportunities within India's dynamic growth sectors," Goyal said in a tweet on 23 September.

Also read | Centre directs energy PSUs to list green energy business

India’s commerce and industry ministry said in a statement the same day, “The Minister also met senior representatives from the Australian pension funds. Discussions focused on the robust policies and reform agenda of the Government of India which have boosted investor confidence. The Minister encouraged greater investments into the emerging sectors in the Indian market viz renewable energy, manufacturing, education, fintech, agritech etc."

Analysts remain buoyant about India’s power sector space in general and renewable energy sector in particular.

“India’s clean energy technology capacity is projected to rise significantly by 2030," S&P Global Commodity Insights said in a 7 October report.

“India’s power demand will rise by about 8% in 2024, accelerating from 7.6% in 2023, following an 8.4% increase in 7M24," Fitch Ratings said in a 3 October report. “Our forecast is underpinned by India’s robust industrial growth and economy, even as the demand surge caused by the extreme heatwave from May to July begins to moderate."

Also read | RIL aims to be green energy leader, boost retail and Jio investments

The report further said that the addition of renewable energy capacity is expected to gain significant momentum over the next two to three years.

“This follows a marked increase in new project auctions, which rose to 70GW in the fiscal year ended March 2024 (FY24), from 20GW in FY23. Fitch anticipates that the economic environment - characterised by stable interest rates and lower equipment prices-will continue to support capacity additions in the next few years," the report added.