GIC to invest $621m in Indian toll road assets
Singapore’s GIC Private has agreed to invest up to INR44 billion ($621 million) in nine toll road assets controlled by Indian private road and highway firm IRB Infrastructure Developers.
The portfolio includes around 1,200 kilometers of road projects in Haryana, Uttar Pradesh, Rajasthan, Gujarat, Maharashtra, and Karnataka, located along economic corridors and in tourist hubs. Three of the projects are operational, while the others are in various stages of construction. Net revenue generated by the assets in fiscal year 2019 was INR6.3 billion; the enterprise value of the portfolio at completion is estimated at around INR225 billion.
IRB will transfer the assets into a private infrastructure investment trust (InvIT) in which IRB will take a 51% stake, with GIC holding the remainder. GIC’s capital will be used to deleverage the portfolio and to fund future construction costs for the unfinished projects. IRB will have management control over all assets, while GIC will have customary rights of a financial investor including board representation.
“We are delighted to have GIC as our long-term investor in this growth story,” Virendra Mhaiskar, chairman and managing director at IRB, in a statement. “IRB and GIC also plan to explore future road sector opportunities in India through the private InvIT, exhibiting IRB’s strength and domain expertise as a market leader in India’s road and highway sector.”
Recent investments by GIC in India’s infrastructure sector include a INR50 billion commitment to telecommunications provider Bharti Airtel, part of a larger INR320 billion capital infusion including Bharti’s promoters. The sovereign wealth fund has also participated in deals for renewable energy producer Greenko Energy Holdings alongside the Abu Dhabi Investment Authority (ADIA), and for power grid operator India Grid with KKR.
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