Arshiya Rail mulls 18% stake sale to buyout firms

Indian container rail service provider Arshiya Rail Infrastructure is in discussions with unidentified private equity firms to sell an up to 18 percent stake in itself for INR 1 billion ($20.5 million).

Private equity groups with active Indian infrastructure funds include 3i and Macquarie Group.

A subsidiary of global logistics group Arshiya International, Arshiya Rail will use proceeds from a potential sale to partially finance the second phase expansion of Arshiya Rail Infrastructure’s pan-India container railway infrastructure project. 

Fundraising for the deal is expected to be completed by October, said Ajay Mittal, group chairman and managing director of Arshiya International.

India-dedicated infrastructure funds have been on the rise over the last two years. Most recently, the State Bank of India partnered with the state government of Gujarat to create an INR 50 billion infrastructure fund.

“There is an absolute shortage of high quality infrastructure in India, so demand is very high. The government plans to spend $500 billion over the next five years to bring the country’s infrastructure into some form of acceptable condition. So there is a big requirement,” Anil Ahuja, 3i’s Asia head, recently told sister publicatoin PEI Asia. 3i closed a $1.2 billion India fund last year.

Arshiya Rail Infrastructure did not reply to requests for comment.