Highway Infrastructure Trust, an infrastructure investment trust (InvIT) backed by private equity firm KKR, has agreed to acquire a dozen road projects from PNC Infratech Ltd and PNC Infra Holdings Ltd for a total enterprise value of ₹9,005.7 crore.
This will be the InvIT’s biggest acquisition till date and one of the largest deals in the Indian roads sector.
The transaction will be made in one or more tranches and the total deal value includes earnouts and is subject to any adjustments as specified in the agreements, Highway Infrastructure Trust (HIT) said in a statement on Monday. The InvIT has signed definitive pacts with PNC Infratech and PNC Infra Holdings for the deal.
The portfolio comprises 11 hybrid annuity model (HAM) road concessions from the National Highways Authority of India (NHAI) and one toll road concession from the Uttar Pradesh State Highways Authority. It represents around 3,800 lane kms in the states of Rajasthan, Uttar Pradesh, Madhya Pradesh and Karnataka.
Out of the total, 10 projects are currently operational and the remaining two are under-construction, which will be acquired after commencement of operations, according to the statement.
“This is a defining transaction in the roads sector, and acquisition of this portfolio demonstrates our commitment to growth and delivering value to our unit holders,” said Neeraj Sanghi, chief executive officer, Highway Concessions One, the investment manager to HIT.
HIT’s current portfolio comprises 10 assets with a total length of 628 km across six states, including the recent acquisition of a toll asset from Navayuga Engineering Company Ltd and 3 HAM assets from HG Infrastructure.
“The transaction is one of the largest acquisitions in the highways sector. Annuity nature of cashflows from the Target Portfolio would provide further stability to our existing portfolio. This investment is in line with our thesis of acquiring assets with long balance concession life generating predictable distributions for our unitholders,” said Gaurav Chandna, head – strategic finance at Highway Concessions One.
He added that with this transaction and other signed transactions, HIT’s assets under management is estimated to cross ₹20,000 crore.
HIT is currently also in the process of acquiring a portfolio of four roads from Macquarie for an enterprise value of ₹2,952.1 crore.
The InvIT is raising ₹2,190 crore through a preferential allotment from its sponsor KKR, Canadian pension fund Ontario Teacher’s Pension Plan and Ranjan Pai’s Manipal Education and Medical Group India Pvt Ltd.
KKR will be investing ₹1,490 crore through the preferential allotment, while OTPP and Manipal group will invest ₹450 crore and ₹250 crore, respectively.
