Home / Companies / News /  GIP starts process to monetize Highway Concessions One

Mumbai: US-based Global Infrastructure Partners (GIP) which recently bought IDFC Alternatives Ltd’s infrastructure investment business has started the process of selling its road platform, two people aware of the development said. GIP has hired Citi as the investment bank to manage the sale of the road platform called Highway Concessions One Pvt. Ltd (HC1), the people cited above said on condition of anonymity.

Canada’s Caisse de dépôt et placement du Québec (CDPQ) is one of the investors which have shown interest, the first person said.

“Even though there is still some dry powder left from the second infrastructure fund raised by IDFC Alternatives, GIP is looking to monetize the road platform in order to return capital to the investors," said the first of the two people mentioned above.

Roads is the most mature one among all GIP platforms and therefore it makes sense to monetize it first, this person added. Its other platforms include renewable energy, telecom towers and rail freight terminals.

HC1 comprises of seven road assets—five toll roads and two annuity roads across seven states. The investments into these projects were made primarily from the second infrastructure fund raised by IDFC Alternatives. The road projects which are part of the HC1 platform include Ulunderpet Expressways Pvt. Ltd in Tamil Nadu, Nirmal BOT Ltd in Telangana, Dewas Bhopal Corridor Pvt. Ltd, Bangalore Elevated Tollway Pvt. Ltd in Karnataka, Godhra Expressways Pvt Ltd in Gujarat, Jodhpur Pali Expressway Pvt. Ltd in Rajasthan and Shillong Expressway Pvt. Ltd in Meghalaya.

According to the company website, beginning in 2014 with one road asset and 73 route km, HC1 now has seven road assets totaling 472 route km and a consolidated revenue of 620 core. “Route length under management has grown at a phenomenal CAGR of 45% since the inception of the platform in 2014," the website stated.

GIP Alternatives completed the acquisition of the infrastructure business from IDFC Alternatives in July. The acquisition has allowed the infrastructure-focused infrastructure fund manager which has offices in the US, UK and Australia establish a foothold in India.

Prior to the acquisition, IDFC Alternatives had raised two infrastructure funds—India Infrastructure Fund and India Infrastructure Fund II aggregating $1.8 billion. It has returned 80% of the capital from its first fund. As part of its investment strategy for the second fund, the firm had focused on buyout transactions, clubbing the assets under various platforms in order to ensure aggregation, better control and governance.

The second person said that although GIP may look at the InvIT route for monetizing its other platforms, it is currently seeking a buyer for HC1. Spokespersons at GIP and Citi declined to comment. “We do not comment on rumors - unfounded or otherwise," a CDPQ spokesperson said.

“Since the fund life is nearing the end it is understandable that the stakeholders are evaluating exit through monetization of assets. As far as the deal activity in road sector is concerned market is more favorable for operational assets as compared to what it was a year ago since there more number of buyout funds interested in matured assets. However one of the challenge GIP could possibly face is that there are too many assets on sale at the moment which may impact the negotiation capability" said Sandeep Upadhyay, managing director, infrastructure, Centrum Capital Ltd.

Upadhay further said that considering road assets of beleaguered IL&FS Transportation Networks Ltd are on the block and there are high chances of fire sale, the investors could have a bias towards assets that are available for cheap.

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