APAC: Brookfield, Macquarie and ROADIS in India’s first road auction

22 February 2018 - 12:00 am UTC

Brookfield Asset Management, Macquarie, PSP Investments-owned ROADIS and IRB Developers have bid for India’s first highway auction.

ROADIS has partnered with India’s National Investment and Infrastructure Fund (NIIF) while IRB has joined hands with Italian road operator Atlantia, sources close to development said.

The National Highways Authority of India (NHAI) in October launched the auction of the first bundle of nine tolled highways worth USD 1bn under the toll, operate and transfer (TOT) model. The earliest deadline of 9 January was twice extended, first to 8 February, and then to 22 February.

The technical bids will be opened on Friday (23 February) and the financial bids will be opened a week later, a senior NHAI official said.

Under the current TOT model, the investor pays an upfront fee for a 30-year concession and takes responsibility for operating and maintaining the assets.

This will be the single-largest foreign investment in India’s road transportation sector, CRISIL has said.  

NHAI’s high profile road asset monetization has failed to attract attention from large foreign institutional investors. From as many as 12 investors who had showed interest at the start of the auction in September last year, only four are in the final race.

Some foreign investors didn’t bid over lack of clarity in the terms and conditions of the bids. For example, the Canada Pension Plan Investment Board and its local partner Larsen & Toubro, India’s biggest engineering company, didn’t bid citing lack of clarity on termination of the concession by the bidder. 

Also, the assets were scattered all over the country and offer no operational synergies. The nine roads in this round are in the states of Andhra Pradesh (southern India), Gujarat (west) and Odisha (east).

According to the budget presented earlier this month, asset recycling is a cornerstone policy of the Narendra Modi administration’s plan to raise money to modernize India’s creaking infrastructure.

India’s transport minister Nitin Gadkari said earlier this month his ministry plans to raise as much as INR 1.25trn from the auction of 105 road projects under its asset recycling plan.

KPMG India in consortium with Ecorys India and HSA Advocates; and V R TECHNICHE in association with Indian Road Survey and Management are advising NHAI on the auction.

A spokesman for IRB confirmed putting in their bid in partnership with Atlantia. Brookfield, ROADIS and Macquarie did not respond to requests for comment.