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Business News/ Companies / I Squared Capital in negotiations to acquire NCC’s tollway project
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I Squared Capital in negotiations to acquire NCC’s tollway project

According to presentation made by NCC in May, the Uttar Pradesh tollway project cost is estimated at `754.5 crore

NCC owns 67% of NCC Infrastructure Holdings Ltd, which owns five road projects and two power projects. Premium
NCC owns 67% of NCC Infrastructure Holdings Ltd, which owns five road projects and two power projects.

Mumbai: Global infrastructure investment manager I Squared Capital, which recently closed a $3 billion fund called ISQ Global Infrastructure Fund, is close to finalizing its second investment in India, said three people familiar with the matter. The fund is looking at two road projects, both of which are operational.

The fund is in negotiations to acquire a majority stake in an Uttar Pradesh tollway project from NCC Ltd, said one of the two persons, adding that the fund was also evaluating the Bangalore Elevated Tollway project.

NCC owns 67% of NCC Infrastructure Holdings Ltd, which owns five road projects and two power projects. It owns a 51% stake in Western UP Tollway Ltd in partnership with IL&FS Engineering and Construction Co. Ltd (IL&FS E&C) and Gayatri Projects Ltd.

The deal could be valued at close to 500 crore, said the second person.

According to presentation made by NCC in May, the Uttar Pradesh tollway project cost is estimated at 754.5 crore. The tollway started generating revenue in April 2011 and has a toll collection of 27 lakh per day, the presentation showed.

“It is a confidential matter; we can’t talk about it," said Y.D. Murthy, senior vice-president of finance at NCC.

On 17 June, NCC had notified the stock exchanges that it was looking to sell the Uttar Pradesh Tollway project and the Bangalore Elevated Tollway.

“As a company policy, I Squared Capital does not comment on market speculations," said the fund in response to an email.

Negotiations are also on between the two parties on Bangalore Elevated Tollway Ltd, which is a partnership between NCC, Soma Enterprise Ltd and IL&FS E&C. The project is estimated to have cost 992.10 crore and generates a toll collection of 30 lakh a day, according to the NCC presentation.

I Squared Capital, which counts ex-Morgan Stanley banker Gautam Bhandari as one of its founders, has been actively evaluating infrastructure projects in India.

“The infrastructure fund is also in negotiations with Soma Enterprise, which is looking to sell its clutch of four-five projects as part of deleveraging its balance sheet. Though a term sheet is still not in place, the discussions are on," said an investment banker familiar with the development.

An email sent to Soma on Wednesday night went unanswered.

If either of these deals are concluded, it would the second transaction in India by I Squared Capital, which in December acquired the 109km Jaipur-Mahua toll road from Malaysia’s IJM Corp. Bhd for 525 crore.

“We will definitely see more sales of road assets going ahead and there are adequate buyers in the market. We have been talking about sale of road assets for last four-five years, but activity has only started picking up pace now. However, valuation is a big problem," said R. Venkataraman, director, infrastructure, India Ratings and Research Pvt. Ltd.

The real worry in the road sector is around operational projects as traffic has been lower than expectations over the last few years, he said. “Last quarter figures show that traffic seems to be picking up, but it needs to be seen if this is a sustainable trend," he added.

To be sure, some global infrastructure funds have been evaluating opportunities to invest in India.

In July last year, Piramal Enterprises Ltd formed a strategic investment alliance with Dutch pension fund APG Asset Management to invest $1 billion in infrastructure companies over a three-year period.

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Published: 10 Jul 2015, 01:17 AM IST
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