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MUMBAI : American private equity firm KKR has stepped into India’s highway sector, signing definitive agreements to acquire Global Infrastructure Partners’ (GIP) entire stake in Highway Concessions One (HC1) and seven highway assets totalling 487km. KKR started making infrastructure investments in the country in 2019.

HC1 is a platform that manages GIP’s India road portfolio across seven states—Gujarat, Karnataka, Madhya Pradesh, Meghalaya, Rajasthan, Tamil Nadu and Telangana. The portfolio comprises five toll roads and two annuity roads. Financial details of the transaction were not disclosed.

“Roads are one of the largest and most crucial infrastructure assets in India, where the world’s second-largest road network is located. Rapidly increasing passenger and commercial vehicle traffic has driven the strong demand to expand the country’s road network even further and the reciprocal need for investment in the sector. This is why the transportation sector is a key area of our infrastructure strategy in India. We are truly excited to invest in a high-quality platform and through HC1 play a part in India’s transport infrastructure," said Hardik Shah, managing director and head of India infrastructure at KKR.

KKR made its investment from the KKR Asia Pacific Infrastructure Fund.

The deal represents KKR’s third investment in India from the fund and the first in Asia’s transport sector. Recent infrastructure investments in India include India Grid Trust (IndiGrid), an infrastructure investment trust, and Virescent Infrastructure, a renewable energy company.

This is the second time GIP has attempted to sell the HC1 road portfolio. In the second half of 2019, it had agreed to sell the portfolio to Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ) for about 2,400 crore.

However, the deal could not be closed within the agreed timelines following the onset of the covid pandemic.

The construction of roads was funded by IDFC Alternatives’ second infrastructure fund, which was acquired by GIP in 2018.

According to a person aware of the transaction details, KKR agreed to acquire the portfolio as these roads have shown strong recovery in traffic following the unlocking of the Indian economy after the nationwide lockdown last year.

KKR will use the HC1 platform to acquire more roads in India, across toll, annuity and hybrid annuity model roads, the person said.

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