IDFC Alternatives buys Indian road for $109m

Indian investment manager IDFC Alternatives has acquired, through its India Infrastructure Fund II (IIF II), a majority stake in Bangalore Elevated Tollway from NCC Infrastructure and Soma Enterprise for about INR7.5 billion (€99.2 million; $109 million).

The transaction sees NCC and Soma fully exit their equal 38 percent stake in the toll road vehicle. Infrastructure Leasing and Financing Services, a Mumbai-based infrastructure development company, is the project's other shareholder. 

Covering 34 kilometres (km) of roads, the toll road project has been fully operational since April 2010 under a 20-year concession period awarded by National Highways Authority of India. It includes a 10km, four-lane elevated highway connecting Silk Board to Electronic City junction section on NH-7 in Bangalore in the state of Karnataka. 

In the year 2014-15, the turnover and net worth contribution of the asset stood at INR0.28 billion and INR0.41 billion respectively. 

“Buying control in operational cash generating core assets remains our preferred investment thesis. We look forward to continuing the calibrated traction on our roads platform and having Bangalore Elevated Tollway as the latest in a series of disciplined acquisitions over the past couple of years,” said Aditya Aggarwal, a partner at IDFC Alternatives.

Ernst & Young acted as the exclusive advisor for the sell side on this transaction. 

Last December, IDFC Alternatives acquired a 37 percent stake in Dewas-Bhopal corridor project from Welspun for INR6.62 billion including debt. The transaction was also made through IIF II. 

As one of India’s largest multi-asset class fund managers, IDFC Alternatives currently has about $3.4 billion of assets under management. Its IIF II has an investible corpus of INR55 billion, according to the statement.

International investors have also been eyeing India's road sector in recent years. 

Reliance Infrastructure, for instance, is currently in negotiations with institutions including Brookfield Asset Management (Brookfield) and the Canada Pension Plan Investment Board (CPPIB) to sell its portfolio of road assets, according to local press reports. 

I Squared Capital-backed Cube Highways made its third acquisition in the Indian road sector last month, building a portfolio of 1,000 lane-km road assets in India. 

Last September, Brookfield and Core Infrastructure India Fund bought six road and three power projects from Gammon Infrastructure Projects for roughly $1 billion.