Photo: Aniruddha Chowdhury/Mint
Photo: Aniruddha Chowdhury/Mint

CDPQ in exclusive talks to buy GIP’s Highway Concessions One road portfolio

  • The sale of the road assets to CDPQ could fetch up to 3,000 crore in enterprise valuation
  • The HC1 portfolio, comprising seven road assets—five toll roads and two annuity roads—is spread across seven states and generates a consolidated revenue of 620 crore

MUMBAI: Canada’s second largest pension fund manager Caisse de dépôt et placement du Québec (CDPQ) is in exclusive talks to acquire Highway Concessions One, a roads portfolio owned by infrastructure fund manager Global Infrastructure Partners (GIP), two people aware of the development said.

“CDPQ is the only one left in the race now and they are in exclusive talks with GIP," said the first of the two people cited above, both of whom spoke under condition of anonymity.

The sale of the roads to CDPQ could fetch up to 3,000 crore in enterprise valuation, he said.

Mint first reported in December 2018 that GIP had started a formal process to find buyers for the Highway Concessions One (HC1) portfolio, which comprises roads totaling 472 route km.

In April, Mint reported that the HC1 sale process had attracted several buyers including Italian roads operator Atlantia as well as the Piramal Group, apart from the Canadian pension funds. Last month, Mint reported that CDPQ was competing with Canada Pension Plan Investment Board for the GIP roads portfolio.

An email sent to GIP on Friday remained unanswered. A spokesperson for CDPQ declined to comment.

The HC1 portfolio, comprising seven road assets—five toll roads and two annuity roads—is spread across seven states and generates a consolidated revenue of 620 crore.

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

The HC1 platform’s road projects include Ulundurpet Expressways Pvt. Ltd in Tamil Nadu, Nirmal BOT Ltd in Telangana, Dewas Bhopal Corridor Pvt. Ltd in Madhya Pradesh, 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.

The route length under management has grown at a compounded annual growth rate of 45% since the inception of the platform in 2014, according to the company’s website.

GIP Alternatives completed the acquisition of IDFC Alternatives’ infrastructure business last July. This allowed the infrastructure fund manager, which has offices in the US, the UK and Australia, to 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. As part of its investment strategy for the second fund, it had focused on buyout transactions, clubbing the assets under various platforms to ensure aggregation, better control, and governance.

CDPQ has been on the hunt for operating road assets in India for some time now.

Mint reported in May that the pension fund was in talks to buy three road assets from Essel Infraprojects Ltd. However, it dropped the plan later.

The pension fund is also in talks to buy seven road projects from GR Infraprojects, the Economic Times reported on 4 August.

India’s roads sector has seen significant pickup in deal activity this year with many developers looking to monetize their toll road assets.

IndInfravit Trust, an infrastructure investment trust sponsored by the L&T Group, on 1 July said that it is acquiring nine operational road assets from Sadbhav Infrastructure Project Ltd for 6,610 crore.

In June, Mint reported that Edelweiss Infrastructure Yield Plus fund, an alternative investment fund set up by the Edelweiss group, is acquiring two annuity road assets from Hyderabad-based Navayuga Group for approximately $150 million.

Earlier in March, Cube Highways and Infrastructure, the Indian roads and highways platform of global infrastructure fund I Squared Capital, agreed to acquire DA Toll Road Pvt. Ltd, which operates a toll road in the states of Haryana and Uttar Pradesh, from Reliance Infrastructure Ltd.

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