Participating in India’s growth story
Deepak Dara and Bruce Crane speak to Fortune India magazine about how Ontario Teachers’ strategy is making the most of the region’s robust economic growth
At a glance
- Ontario Teachers’ Head of India, Deepak Dara and Head of APAC, Bruce Crane explain their approach to finding opportunities in the region that offer inflation protection and sustainable growth.
- To achieve higher yields and combat inflation while maintaining pension obligations, Ontario Teachers’ is aligning its regional strategy with India’s strong economic growth.
- Since 2022, Ontario Teachers’ has made several strategic investments in India, beginning with two deals involving the purchase of Mahindra Susten’s renewable energy assets and the acquisition of Sahyadri Hospitals, a leading hospital chain with eight locations.
- Earlier this year, its venture growth investment arm, Teachers’ Venture Growth, invested US$80 million into Perfios, India’s leading B2B SaaS fintech company.
- Patience and a long-term perspective are crucial for success as Ontario Teachers’ scales up its investments in India.
Investing in India’s economic future
Finding growth opportunities that also help guard against inflation is critical to Ontario Teachers’ strategy as it looks to provide long-term retirement security for its members. India is increasingly becoming a country with attractive opportunities that can deliver higher yields and inflation protection.
In a recent Fortune India article, Deepak Dara, Senior Managing Director and Head of India, and Bruce Crane, Executive Managing Director and Head of APAC, discussed the pension’s growing interest in India and outlined its strategy for the region.
Seeking inflation-protected assets that offer sustainable growth
In a mature defined benefit pension like Ontario Teachers’, where the ratio might be 1.2 contributions for every retiree, “you have to go higher in the risk curve in order to generate investments that can help you continue to pay pensions,” said Dara. “But you have to do it in a manner which is more sustainable.”
By focusing on inflation-protected assets that offer sustainable growth—such as investments in India’s infrastructure and renewable energy sectors—Ontario Teachers’ is able to balance this risk while creating long-term value and securing the financial future of its members.
The Indian government’s strong support for renewable energy and infrastructure development, coupled with its openness to foreign capital, makes India an appealing destination for long-term investment.
Investing in a growing economy over the long term
As a long-time investor in infrastructure assets, Ontario Teachers’ was drawn to the Indian government’s $1.5-trillion investment in physical and digital infrastructure, energy, renewables, transportation and urban development over the past decade. However, Ontario Teachers’ investment philosophy extends beyond financial returns, focusing on building sustainable, long-term businesses in sectors like healthcare and infrastructure, where investments have longer gestation periods.
Within infrastructure, Ontario Teachers’ investments are strategically aligned with the Indian government's priorities, particularly in roads and renewables. As an anchor investor in the National Investment and Infrastructure Fund (NIIF), Ontario Teachers’ has gained insights into the government’s plans and opened opportunities to participate in its national monetization initiative. Ontario Teachers’ significant investments in roads and highways, including partnerships with KKR Highway Infrastructure Trust, further reinforce its commitment to India's infrastructure growth.
Bruce Crane highlighted that Ontario Teachers’ strategy in India is anchored around creating platforms that own infrastructure assets, such as its Sustainable Energy Infrastructure Trust (SEIT), which is an Infrastructure Investment Trust (InvITs). InvITs are investment vehicles that can be listed allowing investors to trade units during specific trading windows.
As India’s economy expands, the utilization of these assets is expected to increase, boosting their profitability. Crane also pointed out that the Indian government’s strong support for renewable energy and infrastructure development, coupled with its openness to foreign capital, makes India an appealing destination for long-term investment.
The Indian government’s strong support for renewable energy and infrastructure development, coupled with its openness to foreign capital, makes India an appealing destination for long-term investment.
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Making strategic investments in India
While Ontario Teachers’ had been investing in India for almost a decade, it opened its first office and expanded into India in 2022, with Dara supporting the establishment of a team and overseeing two $300-million deals in the region. The first was the acquisition of Mahindra Susten’s renewable energy assets, a strategic move supported by regulatory backing for renewable projects which provide added stability and certainty. This investment also aligns with Ontario Teachers’ keen interest to support clean energy projects given Mahindra’s pledge to adopt 100% renewable energy by 2030 across its many other businesses in the auto, financial services and technology sectors.
Earlier this year, Ontario Teachers’ launched its SEIT with the Mahindra Group, raising USD$165 million, making it the largest renewable InvIT in India. Seeded by Mahindra Susten, SEIT holds operational renewable energy assets with a generation capacity of approximately 1.54 Gigawatts.
The second $300-million deal was Ontario Teachers’ acquisition of Sahyadri Hospitals Group, a leading hospital chain with eight locations and plans to double its over 1,000-bed capacity through both organic and inorganic growth. This investment is seen as a validation of India’s maturing healthcare sector, driven by increasing insurance penetration, rising demand for high-quality care and greater patient health awareness. This investment also marks a significant shift in Ontario Teachers’ investment approach in India, as it was the first deal where the pension plan took operational control.
Ontario Teachers’ has been steadily increasing its risk aperture one step at a time, Dara explained. The pension plan’s initial foray into the country involved partnering with local managers. Eventually, Ontario Teachers’ began co-underwriting with managers, which meant collaboratively evaluating opportunities. Today, Ontario Teachers’ is independently engaging in control transactions, said Dara.
Building scale in India
In keeping with Ontario Teachers’ mission, the pension is focused on increasing its investments in the region through select investment opportunities. Earlier this year, through its late-stage venture and growth investment arm, Teachers’ Venture Growth (TVG), Ontario Teachers’ invested US$80 million into Perfios, India’s leading B2B SaaS fintech company.
Dara explains there is a premium for scaled assets because “it can take a long time to build this sort of scale in India.” He emphasizes that Ontario Teachers’ is adopting a more hands-on approach, similar to that of a general partner (GP), rather than just a capital-providing limited partner (LP), recognizing that patience and a long-term perspective are essential.
As investor interest in India continues to grow, Crane is not worried that increased competition will diminish the market’s potential. On the contrary, he believes it could enhance the market’s attractiveness, as competition can help mature the market, making it a more stable and appealing place to invest. Crane also points out that the overall business environment in India has improved, in part due to better advisory services, as well as the introduction of innovative investment products like infrastructure investment trusts.
Visit Fortune India to read the full article.
