Last month, the Indian government announced policy changes that allow developers to divest 100 percent of their equity in all build-operate-transfer (BOT) projects two years after the completion of such schemes.
As many as 80 such projects were awarded prior to 2009 and the move is set to unlock investments worth about INR45 billion (€600 million; $680 million) in the sector.
The official statement by the Cabinet Committee on Economic Affairs said that the approval would allow highway developers to invest proceeds from the sale of divested equity in incomplete highway and power sector projects in India, as well as use the funds to repay their debt to financial institutions in any other infrastructure projects.
“This will result in physical completion of languishing infrastructure projects. This in turn will bring relief to citizens /travellers in the concerned area,” added the statement.
Previously, developers of road projects signed before 2009 had to hold at least a 26 percent stake.
IDFC Alternatives, the Indian multi-asset class investment manager, has expressed its interest in some fully operational road projects and has been in active discussions with developers to acquire stakes in road projects, according to press reports.
“For the road sector, our strategy is to acquire controlling stakes in operational projects and consolidate the stakes into a holding company, which can eventually be listed through an IPO (initial public offering) or InvIT (infrastructure investment trust) route,” M.K. Sinha, the firm’s managing partner and chief executive, told press sources.
Transport infrastructure, including toll roads, bridges, highways, ports and airports, has been part of the company’s core investment strategy. IDFC Alternatives intends to invest INR40 billion in projects across the power and transport infrastructure sectors.
The infrastructure team of IDFC Alternatives now has $1.8 billion under management, comprising the $927 million India Infrastructure Fund and the $900 million India Infrastructure Fund II.