Private equity firm I Squared Capital has agreed to acquire Western UP Tollway Ltd from NCC Ltd, Gayatri Projects Ltd and its subsidiary Gayatri Infra Ventures Ltd for an enterprise value of Rs 575 crore (about $85 million).
Singapore-based Cube Highways and Infrastructure, the Indian toll road and transportation investment platform of I Squared Capital, has signed a share purchase agreement with NCC and Gayatri Projects to buy the stake, according to a stock market disclosure.
Western UP Tollway is a four-lane highway project connecting the Meerut-Muzaffarnagar section of NH 58 in Uttar Pradesh under the National Highway Development Project. The project has been fully operational since October 2011 and has a 20-year tolling period.
NCC holds a 51 per cent stake in Western UP Tollway while Gayatri Infra Ventures owns the remaining. The transaction, which is subject to certain closing adjustments, is likely to be completed in one to two months.
The divestment is part of Hyderabad-based Gayatri Projects' efforts to monetize its road investments, reduce its debt burden and adopt a more asset-light business model.
Shardul Amarchand Mangaldas & Co acted as the legal advisor to Cube Highways in its acquisition of Western UP Tollway. Tatva Legal was the legal advisor while EY (formerly Ernst & Young) was the financial advisor to the project company and the sellers.
I Squared has been increasing its exposure to India's infrastructure sector over the past year or so. In October 2014, the World Bank's private investment arm, International Finance Corporation, had committed up to $90 million of equity investment in a Singapore-based holding company of I Squared to acquire operating road assets in India.
In April 2015, it raised $3 billion in a global fund that will invest in assets across several markets, including India. In August, it invested an undisclosed amount in Amplus Energy Solutions Pvt Ltd, an operator of rooftop solar power systems in India. And in October, I Squared Capital agreed to acquire a road project from Madhucon Projects Ltd for Rs 248 crore (about $37 million).