Baring Private Equity Partners India, a leading Indian private equity firm, is investing up to Rs 475 crore in Oriental Tollways, a part of the Rs 1,000-crore, New Delhi-based Oriental Structural Engineers (OSE). Sources close to the development told VCCircle that the deal involves a ‘significant minority stake’ dilution.
Orient Structures, part of the New Delhi-based and privately owned Bakshi Enterprise, is a company focused on infrastructure development, highways and runways.
The company is undertaking several road and highway projects across the country, under Oriental Tollways. Dabur India vice-chairman Amit Burman is a shareholder in OSE in a personal capacity.
When contacted, a Baring Private Equity spokesperson said, “As per company policy, we do not comment on market speculation.”
Apart from construction of roads, highways and airfields, the infrastructure services firm also has expertise in building bridges, flyovers and embankments. The company works with National Highways Authority of India, the Ministry of Road Transport & Highways, Roads & Highway Department, Govt. of Bangladesh, Indian Air Force, Central Public Works Department, Airports Authority of India, state public works departments and municipal corporations, according to its website.
It also has two subsidiaries – Oriental Pathways Indore Pvt Ltd and Oriental Pathways Agra Pvt Ltd. Oriental Pathways Indore Pvt Ltd is a special purpose vehicle, incorporated for managing and converting the existing two-lane road to four-lane dual carriageway on Indore-Khalghat section in Madhya Pradesh on build, operate and transfer basis.
Oriental Pathways Agra Pvt Ltd is an SPV for converting the existing two-lane road to four-lane dual carriageway on Agra-Bharatpur section in Uttar Pradesh and Rajasthan.
Earlier too, Oriental Tollways had raised PE funding. In 2008, India-focused investment firm Infrastructure India Plc. picked up 49 per cent in the construction firm Oriental Tollways for Rs 450 crore ($90 million). Infrastructure India is a closed-end infrastructure investment firm which got listed at the London Stock Exchange in June, 2008. It had also raised equity from GE Capital and Ashmore for its realty arm.
Of late, the Delhi-based private equity firm has been increasing the ticket size of its acquisitions. This came close to the heels of the PE firm infusing $90 million in Cethar Vessels Ltd, the boiler manufacturer that marked the largest private equity investment from the firm. Baring India closed its fund III at $550 million in 2008 and recently invested Rs 157 crore, along with Matrix Partners, in Kerala-based NBFC Muthoot Finance Ltd.
The road sector has been increasingly attracting the attention of private equity players. India may require $1.7 trillion in the decade starting 2010 to meet infrastructure demand and keep pace with economic growth and urbanisation, said a report by Goldman Sachs. Of this, power and roads alone may require upwards of $700 billion.
In a recent deal, Norwest Venture Partners and Xander Group invested Rs 400 crore in Sadbhav Infrastructure Project, which has a portfolio of nine concession-based projects. Nandi Infrastructure Corridor Enterprises Ltd (NICE), which is developing the 164 km tollway between Bangalore and Mysore, is currently in talks with PE players to raise funding of around $100 million.
Private equity major Actis formed a $200 million joint venture with Tata Realty & Infrastructure to develop roads and highways. India Venture Advisors also invested Rs 50 crore in C&C Constructions, a player in roads and highways.