The decision by Piramal, an Indian family-owned conglomerate, to invest billions in infrastructure in its home country is exciting. If more families did the same, they might help kick-start long-term development more than politicians ever could.
Piramal Enterprises Ltd, a family-controlled conglomerate run by Ajay Piramal, recently announced a partnership with a Dutch pension fund to invest $1bn over the next three years in infrastructure in India, via rupee denominated mezzanine instruments. The Piramal conglomerate, PEL, and APG have each initially committed $375m.
Clearly, both PEL and APG want to make not just profitable investments, but also ones that stimulate development. Ajay Piramal called APG a “like-minded, focused and committed global investor”, and talked about “PEL’s long-term plan and vision of playing a contributing role towards investments that promote growth.”
APG, while it stresses that it is focused on getting the best returns for its pension-holders and that “doing good is never a starting point” for its investments, is well known to be keen on environmental, social and governance issues.
It’s a mantra at Family Capital that businesses benefit from long-term thinking. But countries do too. The only way to achieve sustainable development and growth is through patient investment. Politicians who are tied to the electoral cycle and a news media with a gnat-like attention span are exactly the wrong people to achieve this. Markets obsessed with quarterly results or daily share-price fluctuations are not much better.
In India business leaders are close to despairing at the failure of prime minister Narendra Modi to improve the country’s slow, inefficient and overly-bureaucratic system. So the Piramal family’s decision to take the long view is very positive.
And it looks like this might be an ongoing strategy for PEL. Earlier this year it also did a $500m deal with the Canada Pension Plan to develop commercial real-estate. Ajay Piramal says that he wants to increase the size of his investments to $3.5bn.
In a world in which even large-scale infrastructure projects which will take decades to build – not to mention pay for – are made for short-term political gains, injecting a long-term family ethos into investment can only be good. It would also be welcome in areas such as health and the environment.
It is ironic that in India, where the political families that have dominated the country since independence are finally fading from sight, a business family is now stepping up.