Morgan Stanley in talks to buy Lanco's road assets

Some other infra-focused private equity players are also undertaking due diligence for Lanco's road assets, which have been valued at between INR10 billion ($180 million) and INR12 billion. Ernst & Young is advising Lanco on the sale, sources told Business Standard.

Last year, Morgan Stanley Infrastructure Partners entered into a joint venture with Spanish company Isolux Corsán to invest in road projects in India, intending to contribute $200 million each.

Infrastructure has emerged as one of the biggest opportunities for private equity investors in recent years. PE investment in infrastructure reached $4 billion in 2010, up four-fold from 2006, according to a 2011 report from Bain & Company. Deal values are also tipped to grow 25-50% annually over the next three years.

In the road sector, investors are bidding for mega highways that cover long distances.

"When the government bid out road projects several years ago, a $100-200 million deal was already considered to be very big in size and you could see seven to eight players running for it," Deepak Bagla, partner at 3i, told AVCJ. "Recently, the government bid out a road project worth over $1 billion and received interest from more than a dozen players."

In early 2012, 3i invested INR3 billion ($61 million) for a 49% stake in Supreme Infrastructure India's portfolio of road BOT projects.

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• Topics
• South Asia
• Infrastructure
• India
• Infrastructure
• Morgan Stanley
• 3i Asia Pacific