IndInfravit acquires nine Indian roads and a new investor

Indian road developer SIPL will own 10% of the infra investment trust alongside CPPIB, Allianz Capital Partners, OMERS and trust sponsor L&T IDPL.

IndInfravit Trust has agreed to buy nine operational toll roads from Sadbhav Infrastructure Project Limited, bringing the total number of roads in its portfolio to 14.

Under the terms of the deal, which gives the roads portfolio an enterprise value of approximately 66.1 billion rupees ($960.1 million; €850.6 million), SIPL will receive cash as well as a 10 percent stake in the trust, a source familiar with the transaction told Infrastructure Investor.

Neither Canada Pension Plan Investment Board nor Allianz Capital Partners, which respectively hold a 30 percent and 25 percent stake in IndInfravit, provided financial details in a joint statement. However, CPPIB expects its financial commitment to be “up to C$220 million” ($168.1 million; $148.9 million).

The roads portfolio comprises nine roads spanning 2,619 kilometres across Gujarat, Karnataka, Maharashtra, Rajasthan and Telangana. According to the statement, these five states contribute approximately 39 percent to the country’s gross domestic product and represent roughly 28 percent of the country’s population. Of the nine roads, seven are toll roads, while the other two are annuity roads – where tolls are paid directly to the government and the operator receives a fixed fee based on availability.

Asked whether the partnership with SIPL will lead to IndInfravit acquiring more roads from the developer in the future, a spokeswoman for ACP said: “IndInfravit will review potential future transaction opportunities available in the Indian market when they arise. In addition, SIPL will maintain an operational role in relation to the acquired roads in order to ensure continuity and high-quality service.”

SIPL owns three operational road project companies and 12 under-construction road projects.

The deal, which is expected to close in the fourth quarter, comes a little over a year since CPPIB and Allianz Capital Partners invested in IndInfravit, marking the latter’s first direct investment in Asia. In February, another Canadian pension, the Ontario Municipal Employees’ Retirement System, also became an investor in the trust, acquiring a 22.4 percent stake for a total consideration of 8.7 billion rupees.

CPPIB declined to comment for this story.