In its first investment in the roads & highways segment, Macquarie-SBI Infrastructure Fund (MSIF) is putting in $150 million in the portfolio of projects held by Ashoka Concessions, a subsidiary of Ashoka Buildcon Ltd. Ashoka Concessions will have 7 large-sized roads and highways projects, costing nearly $1.6 billion.
Ashoka Buildcon is a highway concession and EPC (engineering, procurement and construction), backed by IDFC Private Equity. The shares of the firm shot up nearly 10 per cent to Rs 279.40 a unit in early trade and were trading at Rs 267 a share, up 4.7 per cent at 10:24 am on the BSE.
Ernst & Young was the financial advisor to Ashoka on the deal.
Till date, Ashoka Buildcon has executed 3,100 km of highways with a portfolio of 25 BOT (build, operate and transfer) road projects, of which 20 are operational and five are under construction.
The funding will help Ashoka Buildcon meet equity commitment for its projects under development. The company reported 15 per cent increase in net sales to Rs 1,495 crore with profit after tax falling 5 per cent to Rs 95 crore in FY12. Ashoka Buildcon has a project book of Rs 4,970 crore at the end of FY12.
MSIF is managed by a joint venture between the State Bank of India (SBI) and Macquarie Capital IFC, a member of the World Bank Group and a cornerstone investor in the joint venture.
This will be the first roads & highways deal by the PE firm, which is investing through a $1.2 billion fund. Macquarie-SBI has earlier invested in thermal power projects of Moser Baer and Adhunik Power and Natural Resources besides telecom tower firm Viom Telecom and GMR Airports. Its last investment came in November 2011 when it committed Rs 375 crore to Soham Renewable Energy India, which owns hydro-electric power projects.
Action in roads & highways
The road sector has been increasingly attracting the attention of private equity players. India may require $1.7 trillion during the decade starting 2010 to meet infrastructural demand and keep pace with the economic growth and urbanisation, according to a report by Goldman Sachs. Of this, power and roads alone may require upwards of $700 billion.
One major investment in this sector includes IDFC Alternatives’ $250 million three-way venture with Ashok Piramal Group (APG) and SNC-Lavalin to jointly bid for roads and highways projects in India.
Among other deals, JP Morgan’s infrastructure fund invested in Nandi Infrastructure Corridor Enterprises (NICE) and last year, Morgan Stanley Infrastructure Partners formed a $400 million joint venture with Isolux Corsán Concesiones for road projects in India.
3i India Infrastructure Fund also completed two deals in this space – putting $111.51 million in KMC Infratech Ltd and $61 million in Supreme Infrastructure BOT Holdings.
Xander Group invested Rs 240 crore in HCC Concessions and also co-invested Rs 400 crore in Sadbhav Infrastructure Project with Norwest Venture Partners.
(Edited by Sanghamitra Mandal)
