Actis, Tata launch Indian infrastructure joint venture

The private equity firm and Indian conglomerate have invested a combined $200 million in a joint venture vehicle which will target road and highway building project work worth an aggregate total of $2 billion.

In its debut deal in India’s infrastructure sector, UK-headquartered emerging markets private equity firm Actis has teamed up with India’s Tata Group to invest a combined $200 million in road building projects in India over the next five years.

Under the terms of the joint venture, Actis will pay $77.5 million for a 35 percent stake in TRIL Roads, a holding company and fully owned subsidiary of Tata Realty and Infrastructure (TRIL). Tata will invest $122.5 million and hold 65 percent of the equity.

The two companies will partner with Italian toll roads operator, Atlantia, which already has a partnership arrangement with TRIL, to raise approximately $400m of total equity. This capital will then be levered with government equity grants and project debt up to allow investments in road concessions of approximately $2 billion, according to Michael Till, a partner at Actis.

TRIL is the real estate and infrastructure arm of Tata Group, one of India’s largest conglomerates. It is currently working on infrastructure projects focusing on airports, urban infrastructure, roads and bridges, etc. According to the TRIL website, an offshore fund of $1 billion is in the process of being set up to finance these initiatives.

According to a statement, Atlantia is Italy’s largest infrastructure investor, with over €18 billion in projected work, and is also the country’s biggest toll motorway builder and operator. TRIL last year entered an agreement Atlantia to bid for concessions to upgrade, operate and toll existing Indian roads and highways.In 2009, the two firms won the concession for the 110 km Pune-Solapur Expressway, valued at approximately $308 million.

Actis has raised $7.3 billion in funds to-date and has over 100 investment professionals in nine offices throughout Africa, China, Latin America, South and South East Asia. The firm will make this investment from its second infrastructure-focused fund, which closed in October last year on $750 million.