According to two insiders, if the transaction is completed, it will become the largest procurement of road projects by the private equity (PE) firm, headquartered in the United States, in India.
Image-: Reuters.
KKR’s highways platform, Highways Infrastructure Trust, is engaging in discussions to obtain a collection of 12 road projects from PNC Infratech – a construction firm based in Agra – for an enterprise value of approximately ₹9,000 crores (equivalent to around $1.1 billion). According to two insiders, if the transaction is completed, it will become the largest procurement of road projects by the private equity (PE) firm, headquartered in the United States, in India.
The portfolio on offer is made up of 11 hybrid annuity model (HAM) roads and one build-operate-transfer (BOT) road situated across the states of Uttar Pradesh, Madhya Pradesh, and Rajasthan. “Four bidders were interested in the PNC portfolio. The company has opted for KKR, and the PE firm is now commencing due diligence on the assets. The portfolio’s enterprise value is approximately ₹9,000 crore, with a debt of around ₹6,900 crore,” said one source. Seven of the 12 road projects are currently operational, while the remaining five will become operational within the next three to four months. The source added, “This is one of the most extensive road portfolios currently available on the market.”
KKR is one of the most active searchers for road projects in the country. In the previous month, Highways Infrastructure Trust, an infrastructure investment trust (InvIT), signed contracts to obtain four HAM projects from HG Infra Engineering for an enterprise value of ₹1,394 crores. In April, KKR signed contracts to obtain a 100% equity stake in Navayuga Udupi Tollway, a toll road located in Hyderabad, from the Navayuga group, for an enterprise value of ₹924 crores.
In 2021, KKR began investing in Indian roads by purchasing Global Infrastructure Partners’ complete stake in Highway Concessions One (HC1) highway assets, which totaled 487 km. The HC1 road portfolio is spread across seven states, including Gujarat, Karnataka, Madhya Pradesh, Meghalaya, Rajasthan, Tamil Nadu, and Telangana. The portfolio consists of five toll roads and two annuity roads.
The assets within KKR’s roads InvIT include Jodhpur Pali Expressway, Godhra Expressways, Dewas Bhopal Corridor, Ulundurpet Expressways, Normal BOT, and Shillong Expressway. The Indian roads sector is experiencing a surge in deal activity as developers seek to monetize their operating road projects to reduce debt and reinvest resources in new projects, and foreign investors search for long-term yield-generating infrastructure assets.
