From smart meters to power transmission and even semiconductor fabrication units, Brookfield is open to “thematic opportunities” that fit into its global charter of 3Ds – decarbonisation, deglobalisation and digitalisation, said Arpit Agarwal, its managing partner and head of the infrastructure vertical in India.
Brookfield is the largest foreign investor in Indian core sectors.
Just last week, it completed the acquisition of American Towers Corp's telecom tower portfolio in India for $2.2 billion, becoming the world's largest independent tower company excluding China. The new entity – Altius – with 257,000 towers and cell sites, will house ATC's portfolio along with Reliance Jio's telecom towers and Crest Digital's in-building solutions.
“We can now enhance connectivity with our customers, offering a full set of solutions,” Agarwal, 41, said in his first media interaction. “We will continue to obviously increase co-locations on our existing towers, but also support the build-out requirements for our customers. Our portfolio will now have small cells and in-building solutions as well as macro towers to meet the growth in (data) consumption,” he said.
Jio has been its anchor tenant since Brookfield acquired Jio's tower arm in 2020, but the ATC portfolio has good representation of all major telecom operators. In addition, with ATC, “we are also getting operations and maintenance capabilities,” Agarwal said. He added that Altius will look to diversify its revenue sources in the future and explore co-location opportunities with data centres, another fast-growing segment for the firm. Mobile data consumption in the country has grown from one gigabyte in 2016 to 31 gigabytes per subscriber per month and is projected to reach 75 gigabytes by the end of this decade. There are 650,000 towers to cater to this, which could double by 2030 due to 5G network rollouts and the expansion of the three major private telecom companies in the country.
“Small cells and in-building solutions are clearly high growth areas…growing quite fast from the current footprint of 50,000,” said Aggarwal. “Crest has seen a 40% growth on the back of 5G rollout. A lot will depend on the pace at which telcos can monetise 5G.”
According to Aggarwal, with prudent capital allocation in only meaningful ROCE projects, Altius will allow Brookfield to make independent financial decisions along with Singapore's GIC and British Columbia Investment Management Corporation (BCI). “We have adequate capital to support this platform,” he added.
Beyond telecom infrastructure, the firm is actively exploring public-private opportunities in diverse sectors ranging from ports to urban infrastructure. With infrastructure trusts (InvITs) becoming a large asset class, it has become easier to monetise large projects and invite major institutional investors. With a market capitalisation of Rs 60,000 crore, Brookfield-sponsored InvITs in oil pipelines to telecom towers currently account for a third of all InvITs in the country by market value.
“We are very keen to participate in projects that meet our threshold of returns. When the NHAI called for bids for TOT projects, we participated aggressively,” said Agrawal, adding that the firm has identified big themes and worked in-depth.
For example, in ports, the Indian government's stated goal is to increase capacity 4-fold in the next 25 years. “I believe 85% of it will be through the PPP route. So, there is still a lot to be done,” he said. “And we are patient capital providers. It doesn't matter if that opportunity is today or next year. If we feel strongly about a subject, we will definitely pursue it.”
Brookfield last year acquired Triton International, one of the largest owners of shipping cargo globally, for a transaction value of $13.3 billion.
Aggarwal said that our effort is to catch the trends quickly.
“In 2018, we made our first global investment in data centres. At that time, it wasn't really an asset class that other people were looking at very keenly,” he said. “And today, we are one of the largest data centre operators globally. And we are building the same business in India as well.”
In 2020, Brookfield also raised the first global energy transition fund, followed by several others joining the race. “We have already deployed a large portion of that transition fund in India,” Agarwal said.
Similarly, when Brookfield signed a 30-year sale and lease back deal with Reliance Industries for its East West Gas Pipeline carrying natural gas from the KG basin, domestic gas throughput using that asset was just 10 mmscmd. It has grown threefold since 2019.
“We bet on production from marginal fields. We knew India needed gas. Same is the case with telecom. So, I would say we are not really looking at near-term trends,” Agarwal said.
The firm has also partnered with Digital Realty Trust (DLR) and Reliance to develop and operate hyperscale data centres in Chennai and Mumbai. These have a cumulative IT capacity of 160 MW upon full development.
In 2022, Intel will partner with Brookfield Infrastructure Partners to develop a $30 billion semiconductor fabrication plant in Arizona. Brookfield is investing $15 billion for a 49 percent stake in expanding Intel's Arizona site, and brings experience in developing infrastructure assets such as transmission lines, data centers and wireless cell towers. Intel, which had described the partnership as “a new funding model for the capital-intensive semiconductor industry”, will retain a 51 percent stake. Agarwal said that while India is considering investing $18 billion in the semiconductor eco-system, it is also keen to play a key role in establishing large-scale investments in India, either with Intel – with which Brookfield is developing a $30 billion semiconductor fabrication plant in Arizona – or with another strategic player. “Schemes like the PLI are positive steps,” he added.