A joint venture of infrastructure-focused private equity firm I Squared Capital and the World Bank’s International Finance Corporation has inked a deal with Reliance Infrastructure.
Singapore-based Cube Highways & Infrastructure Pte. Ltd, which owns and operates toll roads in India, is set to acquire RInfra’s Delhi-Agra toll road project for an enterprise value of Rs 3,600 crore ($518 million at current exchange rates), the Anil Ambani-led firm said in a stock-exchange disclosure.
This will help RInfra reduce its debt by 25% to less than Rs 5,000 crore.
“In addition, National Highways Authority of India (NHAI) claims of Rs 1,200 crore to be filed by DA Toll Road Pvt Ltd will flow directly to Reliance Infrastructure,” RInfra said in a media statement.
Mumbai-based investment banking firm Ambit Private Limited acted as the financial adviser to Reliance Infrastructure Limited on this transaction.
Last month, a report in The Economic Times stated that two Canadian pension funds and one Italian toll road operator had presented offers for RInfra’s Delhi-Agra toll road for an estimated enterprise value of Rs 4,000 crore ($563 million at current exchange rate).
The firm’s special purpose vehicle (SPV) DA Toll Road Private Limited operates the 180-km long six-lane road that connects the national capital Delhi with Agra on National Highway (NH) 2.
“The profitable project has witnessed impressive revenue growth of 25% in FY18," the company said.
The tolling operation for the heavily trafficked project started in October 2012 and has a concession period till 2038.
The debt-laden firm is in the process of executing its strategic plan to monetise assets from its non-core businesses and focus on major growth areas like engineering and construction.
RInfra’s debt has dropped 65% to almost Rs 7,000 crore after it sold the assets in its power and cement businesses in the past few years, media reports have stated.
In 2017, RInfra signed a pact with Adani Transmission Ltd to sell its Mumbai power business, which was valued at Rs 12,101 crore ($1.88 billion).
RInfra is one of the largest infrastructure companies, developing projects through various SPVs in several high-growth sectors such as power, roads and metro rail in the infrastructure and defence sectors.
It is also a major player in providing engineering and construction services for developing power, infrastructure, metro and road projects.
The company through its SPVs has executed a number of infrastructure projects such as a metro rail project in Mumbai on build, own, operate and transfer (BOOT) basis, and eleven road projects with a total length of about 1,000 kilometres on a build, operate and transfer (BOT) basis.
The entity is a joint venture formed by global infrastructure fund I Squared Capital and the International Finance Corporation, the investment arm of the World Bank.
In February this year, it agreed to acquire two road projects of Hyderabad-based KNR Constructions Ltd for around Rs 188.5 crore ($26.5 million).
In December 2017, it agreed to sell a 20% stake to a consortium led by Japan’s Mitsubishi Corp. for an undisclosed amount.
In November 2017, it agreed to sell a minority stake to an entity owned by the Abu Dhabi Investment Authority.