PE fund plans to acquire operating road assets and is in talks with several firms
Global private equity (PE) investor Actis is looking to make long-term yield-focused investments of up to $400 million in India, primarily to acquire operating road assets, two people aware of the plans said. The money will be invested from the $1.2 billion Actis Long Life Infrastructure Fund.
The investor is already in discussions with several construction firms that have operating road projects and even other PE investors looking to sell their road portfolios. “Actis is investing in the roads sector through Actis Long Life Infrastructure Fund. This fund has the mandate to acquire long-term contracted, stable cash flow generating infra assets. Previously, they did one transaction in renewables through this fund last year when they acquired 500 megawatts (MW) of solar operating assets from Acme Solar, but now, they are primarily looking at road projects for this fund," said one of the two people cited above, both of whom spoke on condition of anonymity.
Actis is looking to deploy up to $400 million from the fund into India. “So India is a very important part of this fund, but this amount will only go up in the next fund, which will be much bigger," he added.
Mint has earlier reported that Actis is one of the suitors in the final lap of negotiations to acquire a portfolio of road assets from Brookfield and is also in talks to acquire six road projects from Welspun Group’s infrastructure arm. Both road portfolios are worth over $1 billion in enterprise value.
“The Welspun discussion is at the most advanced stage among the various conversations they are having. Currently, they are in exclusivity on that, and the due diligence is in an advanced stage. They are also having conversations with a construction firm on forming a platform that will acquire and manage operating road assets," the person cited above said.
An email sent to a spokesperson for Actis remained unanswered.
This is not the first time Actis has shown interest in Indian road projects.
In 2010, the investor had tied up with Tata Realty and Infrastructure Ltd to develop road projects in India, but sold its stake back to Tata in 2013.
“Since then, they have invested a lot in the power sector, but roads are also a focus sector for Actis. Today, there is a pool of global capital seeking higher returns, and roads are one of the few sectors in India that has a linkage to inflation; so, there is a sort of inflation protection that is not the case in power. So, from a yield point of view, if you are getting inflation protection, then it makes it very attractive. Plus, the whole InvIT (infrastructure investment trust) structure is more tested in roads and transmission than in renewables; it’s a proven case," the second person added.
He added that after roads, the investor is also keen on digital infrastructure investments in India and that the firm will soon be raising a new fund for such investments.
“Actis is a real assets-focused fund and is keen on sectors such as power, roads, real estate, and digital infrastructure. They can also invest in sectors adjacent to power such as transmission or city gas distribution," he added.