I Squared platform acquires Indian toll road

Agreements have been signed on the acquisition of 57 kilometers (km) of India's National Highway (NH) 11 by Singapore-based Cube Highways and Infrastructure (Cube), an I Squared Capital (I Squared) investment platform, for Rs 248 crore ($38 million, €34.5 million), according to a Madhucon Infra regulatory filing.

The acquisition of a 100 percent equity interest in Madhucon Agra-Jaipur Expressways is set to represent Cube's second investment to date. Upon closing, Cube will own 74 percent, with the purchase of the remaining 26 percent subject to National Highways Authority of India.

The 25-year Agra-Jaipur Expressways project entered operational phase in May 2009. The stretch of highway it is comprised of forms the southern arm of the so-called Golden Triangle between Delhi and the tourist corridors of Agra and Jaipur.

According to Cube Highways Advisors chief executive Harikishan Reddy the investment is well-matched with Cube's first investment into the Jaipur Mahua Tollways concessionaire, which operates a 109km stretch of NH-11 between Jaipur and Mahua.

“This acquisition allows Cube Highways to operate a contiguous 166km stretch of NH-11, and will result in significant operational synergies with Cube Highways' existing investment into JMTPL,” Reddy said. “Traffic on this corridor continues to demonstrate healthy growth as it benefits from the growing economies of two large urban centers, Agra and Jaipur.”

I Squared created Cube in partnership with the International Finance Corporation, the World Bank's private investment arm, which was reported to have made a $100-million investment into Cube to acquire a 20 percent stake in the entity in August.

Gautam Bhandari, Cube's director, said the platform is currently in “active discussions on multiple acquisition opportunities” for its Indian transport concessions portfolio.

Hyderabad-based Madhucon won the contract to widen the two-lane road into a four-lane highway in 2006. According to managing director of Mumbai investment bank Equirus Capital, the bank that acted as exclusive advisor to Madhucon Group, the transaction will help the seller meet its liquidity needs.

The Agra-Jaipur Expressways project was awarded under the build-operate-transfer (BOT) contract model, which calls on the developer to capitalise projects with their own funds, operate them for a designed period, and then transfer the assets back to the government, usually in like-new condition.

Law firm Nishith Desai provided Madhucon with legal counsel.