Canada firm may be roped in to advise land special purpose vehicle

The government is looking to bring Canada Lands Company on board to assist in the operations of the soon-to-be incorporated special purpose vehicle (SPV) that would monetise idle land assets of public sector undertakings (PSUs) and government departments. Canada Lands Company, a self-financing federal government entity in Canada, specialises in real estate and managing tourist destinations. The government has been trying to replicate the Canadian model for its land SPV -- National Land Monetisation Corporation -- that would house sectoral experts to turn around idle land parcels by.....
The government is looking to bring Canada Lands Company on board to assist in the operations of the soon-to-be incorporated special purpose vehicle (SPV) that would monetise idle land assets of public sector undertakings (PSUs) and government departments.

Canada Lands Company, a self-financing federal government entity in Canada, specialises in real estate and managing tourist destinations.

The government has been trying to replicate the Canadian model for its land SPV -- National Land Monetisation Corporation -- that would house sectoral experts to turn around idle land parcels by leasing, selling or even developing them, including those marred by litigation.

“The Canada Lands Company may play an advisory role, and assist the land SPV in its operations,” an official said. This would be in addition to the advisory services being provided by the World Bank to the Department of Investment and Public Asset Management (DIPAM) for the monetisation of non-core assets.

The spokesperson for Canada Lands Company did not respond to an email seeking comment.

Last year, the Centre had approved a World Bank advisory project aimed at analysing public asset monetisation in India and benchmarking its institutional and business models against international best practices. It would also support development of operational guidelines and capacity building for monetising such assets.

This was in line with the government’s renewed push to asset monetisation and unlocking value of unutilised assets which have the potential to substantially augment financial resources for further investments and growth.

Since the announcement on the incorporation of an SPV in the Union Budget, the government has studied several global sovereign-run land banks and considered replicating the Canadian model. As PSUs, post nudging by the government, have tried selling their land assets, they have failed due to pending litigation and lease terms.

On the contrary, Canada Lands Company has been able to dispose of and monetise surplus land of government departments with best value. When the body was set up in Canada, the government departments were incentivised to dispose of their holdings with no immediate benefits, paving the way for the private sector to make a better use of such assets. 

The company receives no government funding, and pays dividend to the Canadian government from the profit it makes. It works with the local government and communities to create projects that are financially viable, with an aim of value creation. In the three years ended March 2020, Canada Lands Company generated $868 million in revenues, and an operating profit of $360 million.

The Cabinet will soon take up the proposal to set up National Land Monetisation Corporation under the Companies Act. The entity will be 100 per cent owned by the government, and would come under the administrative control of the Department of Public Enterprises (DPE).

The land SPV will be able to rent, lease and develop assets to monetise them for a fee. The entity will have an initial authorised share capital of Rs 5,000 crore, and a subscribed share capital of Rs 150 crore. The corporation’s board would include secretaries from the ministries concerned and representatives from the real-estate sector and investment bankers.


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