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Business News/ Companies / I Squared Capital, Tata Realty in talks to buy Durg road project
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I Squared Capital, Tata Realty in talks to buy Durg road project

IDFC Alternatives who bought a 48.4% stake in the road project at Durg, is leading the discussions with potential buyers

I Squared has invested more than Rs1,000 crore through its investment platform Cube Highways and Infrastructure Pte Ltd in three road assets till date.Premium
I Squared has invested more than Rs1,000 crore through its investment platform Cube Highways and Infrastructure Pte Ltd in three road assets till date.

Mumbai: US-based infrastructure investment manager I Squared Capital and India’s Tata Realty and Infrastructure Ltd (TRIL) are among the buyers in race for acquiring the 18.4-km two-lane bypass road project at Durg, Chhattisgarh, from IDFC Alternatives and Nagpur-based infrastructure company SMS Ltd, according to two people aware of the discussions.

IDFC Alternatives, whose first infrastructure fund in 2007 bought a 48.4% stake in the project, is leading the discussions with potential buyers, the people said. SMS owns the remaining 51.6% stake in the project.

A spokesman for SMS confirmed that the company is in talks with potential buyers for a deal that would value the Durg project at about 300 crore. “It’s true that the project is in the market and we have received interest from both domestic and foreign investors. IDFC is leading the process of finding a buyer for the 100% stake," the spokesman said over the phone, asking not to be named as the discussions are private.

IDFC Alternatives did not respond to an email query sent on Thursday. The multi-asset manager has been buying operational road assets from its second fund and wants to start showing returns by way of exits from its first fund before its term ends in the next few years, these people said.

The project, which is under special purpose vehicle (SPV) SMS Shivnath Infrastructure Ltd, is among the first concessions awarded by the National Highway Authority of India (NHAI) in 1997 and has a concession period up to 2031. The asset has been yielding good returns for both IDFC Alternatives and SMS, the SMS spokesman said.

I Squared Capital declined to comment, while TRIL did not respond to an email seeking comment.

I Squared has invested more than 1,000 crore through its investment platform Cube Highways and Infrastructure Pte Ltd in three road assets till date. It has committed to invest in road assets worth 8,000 crore through Cube Highways. Tata Group company TRIL has been looking to buy out operational road assets, but has not closed a deal so far. Under its infrastructure business, TRIL operates the 110-km Pune-Solapur Expressway and is building the 120-km Hampi Expressway at a cost of 1,388 crore.

IDFC Alternatives, which invests in a variety of assets across its various funds, has invested nearly $1 billion in 20 infrastructure projects in India till 2015. Along with I Squared Capital and Canada’s Brookfield Asset Management, IDFC Alternatives is among the few financial buyers who are looking to buy out operational road assets in the country with an annual return target of between 15% and 20%.

In comparison, at least 50-60 highway assets are up for sale in the market. Recent policy changes by the government have resulted in greater investor confidence and more funds are open to looking at investing in Indian highway assets.

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Published: 21 Jun 2016, 12:23 PM IST
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