GIC, Spanish infra group Ferrovial to invest $713.5 mn in IRB Infra

GIC, Spanish infra group Ferrovial to invest $713.5 mn in IRB Infra

By Beena Parmar

  • 26 Oct 2021
GIC, Spanish infra group Ferrovial to invest $713.5 mn in IRB Infra

Singaporean sovereign wealth fund GIC and Cintra, an arm of Spanish infrastructure heavyweight Ferrovial, have agreed to invest Rs 5,347 crore ($713.5 million) to pick up around 42% equity stake in highway construction firm IRB Infrastructure Developers Ltd (IRB Infra). 

This is likely to be among the biggest equity fundraising deals in a listed infrastructure firm. The company made the announcement alongside its financial results after the board meeting on Tuesday. 

“The total investment proceeds to IRB from these investments will be a maximum of Rs 5,347 crore. The issue price for both the preferential allotments is Rs 211.79 per share," the company said.  


“Virendra D. Mhaiskar, the founder-promoter of IRB, will continue as the promoter and single largest shareholder post completion of the transactions with an approximate 34.0% stake and will retain management control of IRB,” it added. 

Public shareholders will continue to own around 66% shareholding in IRB Infra

The indicative use of the proceeds from the investment includes deleveraging of the corporate level debt at around Rs 3,250 crore, growth capital for current and future opportunities at a maximum of Rs 1,497 crore and general corporate purposes at Rs 600 crore, the company added. 


This will also aid the firm to participate in the massive infrastructure development and monetisation plan by the central government. 

The IRB board approved preferential allotment of equity shares between 11.65 crore and 15 crore, at a price of Rs 211.79 per share aggregating up to a maximum amount of Rs 3,180.22 crore to Cintra INR Investments BV, which will pick up 24.9% ownership in the Indian company, the regulatory disclosures showed. 

GIC’s investment vehicle Bricklayers Investment Pte. Ltd will be allotted not less than 6.52 crore and up to 10.23 crore equity shares at the same price worth a total of up Rs 2,166.42 crore through preferential issue on a private placement basis. 


The GIC affiliate is likely to acquire around 15.7% or 16.9% equity stake. 

As per the BSE filing, if GIC preferential issue is completed prior to Cintra preferential issue, the stake will be 15.7% while if both the deals are closed concurrently, GIC will pick up 16.9%. 

The total equity shareholding by both the entities is likely to be around 40.6%-41.8% in IRB Infra.


The IRB board will convene an extraordinary general meeting of its shareholders on November 20 for approval of the deal. 

The infrastructure firm will also sell two non-core assets worth an aggregate consideration of Rs 415-420 crore to Virendra D. Mhaiskar, the promoter of the company, to be effected within two years. 

The non-core assets include Mumbai-based land measuring 13,047.80 sq metres owned by Ideal Road Builders Private Limited (IRBPL, a wholly-owned subsidiary of IRB Infrastructure) and certain equity shares of Aryan Infrastructure Investments Private Limited (AIIPL, another wholly-owned subsidiary of IRB Infrastructure). 


“The overall objective of the transactions is to help the Company focus on its core activity (i.e., construction, agreement operation and management of roads)”, IRB Infra said in the filing on BSE. 

For this purpose, the Company has decided to monetize its non-core assets (namely, the Chandivali Property and the AIIPL Shares) at fair value, and the Promoter has agreed to purchase the same, the filing added. 

Avener Capital acted as the exclusive financial advisor to IRB for the transaction. S&R Associates acted as a legal advisor to IRB Infra. 

Spain-based Cintra currently manages about 915 miles (1,472.5 km) of highways, spread over 23 concessions in Canada, USA, Europe, Australia and Colombia including a 43.23% stake in the 407 ETR highway concessionaire in Ontario, Canada.

IRB Infra

IRB Group (including Private and Public InvIT) has worked on 24 projects with an asset base of over Rs 55,000 crore, and constructed over 13,095 lane km pan-India over the past 20 years.

It has approximately 20% share in India’s Golden Quadrilateral project, the largest by any private infrastructure developer in India.

“Through this investment, IRB will deeply benefit in terms of their global experience and best practices in the development, investment, and operation of toll road projects…This new investment by GIC is a further stamp of approval of their confidence on the robust business model of IRB,” said Virendra Mhaiskar, CMD, IRB Infrastructure Developers. 

The current transaction which addresses the twin objectives of deleveraging the holdco debt and providing growth capital is the final step in optimizing the capital structure, unleashing the free cash flow generation for growth, thus creating immense shareholder value, he added. 

In 2017, IRB sponsored the first Public InvIT providing IRB a platform for recurrent capital recycling. In 2019, it sponsored the Private InvIT, which enhanced the business model by getting a recurrent investor for reducing equity commitments thereby increasing the ability to take in more projects at one time. 

 Andres Sacristan, CEO – Cintra, said, “This investment in IRB Infrastructure Developers represents a great opportunity for Cintra to expand into a new market for us — India — that has very promising fundamentals for toll road development. IRB has a portfolio of high-quality assets and a platform with the capability to capture some of the strong growth expected in this sector. Cintra would work with IRB to enhance its competitive position in the Indian market.” 

Eng Seng Ang, CIO – infrastructure at GIC, said, “Our investment in IRB, a leader in Indian road infrastructure, will enable the company to develop and operate a greater network of roads and further enhance the infrastructure in India. As a long-term global investor, we see India as a key market, given its strong economic fundamentals and infrastructure development potential.” 


GIC has been a long-term investor in the homegrown infrastructure firm. 

Early last year, GIC affiliates had invested Rs 3,750 crore as the first tranche towards investment in IRB Infrastructure Trust,the private InvIT jointly launched by the company and the GIC vehicles with 51% and 49% holding in it, respectively. The second tranche of Rs 510 crore was raised in November 2020 by way of rights issue. 

In 2019, the foreign wealth fund had decided to invest up to Rs 4,400 crore ($621 million) in the roads business of IRB Infra. 

GIC in particular is a large investor in infrastructure and real estate sectors globally and also focused on infrastructure deals in India. 

In May 2019, it joined forces with private equity firm KKR & Co to pump Rs 2,060 crore into Indigrid, a power transmission InvIT.  

In March 2019, GIC tied up with Tata Group and Hong Kong-based stressed assets investor SSG Capital Management to co-invest Rs 8,000 crore in GMR group’s airports business.  

Among other infrastructure companies, GIC backs roads major Gayatri Projects as well as renewable power company Greenko. 

The Singaporean sovereign fund is a known LP and active co-investor with several large global PE funds. It is an aggressive investor in India both via its direct PE-style investments as also through public market deals. 

It is quite common for Limited Partners (LPs) or institutional investors in PE funds to separately put money in portfolio companies alongside funds they have already backed. 

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