Infrastructure investment firm ROADIS and the Indian government-anchored National Investment and Infrastructure Fund (NIIF) have set up a $2 billion platform to invest in road projects in India.
ROADIS is a wholly-owned subsidiary of the Public Sector Pension Investment Board (PSP Investments), a Canadian pension fund.
The platform will invest equity in toll-operate-transfer (TOT) models, acquisitions of existing road concessions and other investment opportunities in the road sector, as per a statement.
“This agreement, which aligns with our growth strategy, strengthens our long-term commitment to India,” said José Antonio Labarra, chief executive officer of ROADIS, which has about 710-km of highways under ownership and management.
In an interview with VCCircle last December, PSP Investments’ global head of private investments Guthrie J Stewart said that it was focusing on scaling up its investments in Indian infrastructure, especially in transport.
ROADIS and NIIF had last year jointly bid for toll-based highways in the first such auction in India where the government decided to monetise operational roads.
Eventually, the National Highways Authority of India (NHAI) sold nine toll-based highways under the TOT model to Australia's Macquarie Group for Rs 9,681 crore (around $1.5 billion).
“The Indian road sector has attracted significant global capital over the last two decades and will continue to offer large investment opportunities,” said Sujoy Bose, managing director and chief executive officer of NIIF.
A recent VCCircle analysis of the sector showed that while the government’s budgetary support and investment ballooned more than four times -- from just short of Rs 33,000 crore in 2014-15 to more than Rs 1.3 lakh crore during the last financial year -- private investment did not maintain that pace.
Private investment in the highways sector went up more than 54% from 2014-15 to 2015-16, but slid sharply in the following two years to around Rs 16,500 crore, before perking up to Rs. 25,000 crore during the last financial year.
Several marquee private equity investors including Macquarie, Brookfield, I Squared Capital, International Finance Corporation-backed Cube Highways and the Kuwait Investment Authority have pumped money into the sector in recent years.
Cube Highways has been particularly consistent in placing bets on the Indian highways sector over the last 4-5 years. Not only was it among the top private equity investors over the past three years, it reportedly also emerged as the highest bidder for this year’s NHAI auctions under the TOT model. However, the government agency canceled the bids since they were far below its expectations.
In 2017, Brookfield Asset Management acquired two assets worth Rs 1,900 crore (close to $300 million) in the largest private equity buyout deal in the roads sector.
*This article has been modified to exclude ChrysCapital from the list of investors in the highways sector.