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I Squared Capital buys out Jaipur Mahua Tollway

09 December, 2014

Private equity firm I Squared Capital will be acquiring 100 per cent stake in Jaipur Mahua Tollway Pvt Ltd (JMTPL), a toll road that helps connect Jaipur with Agra, from Malaysia-based IJM Corporation. 

The deal, which is valued at Rs 525 crore ($85 million), will be concluded through ISQ Global Infrastructure Fund. The acquisition initially will be for a 74 per cent ownership interest, with the remaining 26 per cent subject to approval from the National Highways Authority of India (NHAI). The toll road operates under a 25-year concession to operate and maintain a 109 km stretch of National Highway 11 in Rajasthan and has been operational since 2009.

I Squared Capital is an independent global infrastructure investment manager focusing on energy, utilities and transport in North America, Europe and select high growth economies led by former executives of Morgan Stanley’s infrastructure arm. 

Partners Sadek Wahba, Gautam Bhandari and Adil Rahmathulla previously worked together at Morgan Stanley. Wahba, who was chief investment officer and global head of Morgan Stanley’s infrastructure team, left the bank in late 2011. Bhandari had been a managing director and head of the infrastructure team in Asia, and Rahmathulla was head of investment execution in the Americas for the group. 

Until 2012, when Bhandari quit Morgan Stanley Infrastructure Partners, the $4-billion infrastructure fund of US banking firm Morgan Stanley, the firm had made investments worth about $1 billion (Rs 5,600 crore) in India. Bhandari led a few large deals for the firm with investments in companies such as Asian Genco, Indus Concessions and a buyout of wind power firm Continuum Wind Energy.

In October, World Bank’s investment arm International Finance Corporation (IFC) committed up to $90 million of equity investment in a Singapore-based holding company of I Squared Capital, to acquire operating road assets in India. 

The toll road has seen a revenue growth of over 15 per cent on an annualised basis for the past five years, the press release stated. Over 15 million Passenger Car Units use the two toll plazas of this road on a combined basis annually. “This investment is based on a well-defined strategy of investing in select infrastructure assets that benefit from urbanisation, a growing middle class and rising disposable incomes in growth economies,” says Gautam Bhandari, partner at I Squared Capital. “We believe Indian toll roads offer attractive risk-adjusted returns and provide direct exposure to the growing consumer economy. This was an exclusively negotiated transaction and we are very pleased to be working with a world-class engineering and construction company like IJM. We remain enthusiastic about investment opportunities in India, especially following the positive actions and policies being implemented by the new government,” he added. 

The transaction follows a recent $20 million periodic maintenance programme of the road. IJM had previously invested approximately $50 million in equity and shareholder loans during the construction period. 

“This road provides a critical direct link between two vibrant and growing urban centres and has a well-established operational history of over five years. The asset operates under a time-tested concession agreement framework with features like annual pass-through for inflation in toll rates. Separately, I Squared Capital continues to be in active discussions on multiple other acquisition opportunities as we look to build a portfolio of high quality highway and transportation infrastructure assets,” Harsh Agrawal, managing director at the firm, said.

(Edited by Joby Puthuparampil Johnson)


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I Squared Capital buys out Jaipur Mahua Tollway

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