APAC:Macquarie wins India’s first highway auction

28 February 2018 - 12:00 am UTC

Macquarie Group in consortium with its local partner Ashoka Buildcon has won the bid in the National Highway Authority of India’s (NHAI) first auction of roads that it has built.

Macquarie-Ashoka bid of INR 96.81bn (USD 1.5bn) beat Brookfield’s bid of INR 75.1bn, a senior official of the NHAI said.

There were total four bidders. PSP Investments-owned ROADIS along with its partner India’s National Investment and Infrastructure Fund; and IRB Developers, Atlantia consortium were the other bidders. 

The auction of the first bundle of nine tolled highways have surpassed NHAI’s estimates. It was launched in October and the authority was expecting to get bids of around USD 1bn.

 “We are overwhelmed with the response,” NHAI member (finance) Rohit Singh told Inframation. “We are very happy that public assets are being so highly valued by the private sector.”

Under the toll, operate and transfer (TOT) model the investor pays an upfront fee for a 30-year concession and takes responsibility for operating and maintaining the assets.

“This is a unique opportunity to invest in a high quality diversified portfolio of roads over a long concession period of 30 years,” a Macquarie spokesperson said.

“Macquarie Infrastructure and Real Assets managed funds have been investing in Indian toll roads since 2012. We are the largest foreign investor and are pleased to continue to bring our experience to invest into the sector,” the spokesperson added. “We take a long-term perspective when acquiring and managing assets, seeking to develop investments profitably and responsibly.”

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.

The government’s Economic Survey released last month said the country has an infrastructure gap of INR 50trn (USD 784bn) and advocated this be filled by private financing.

“It bodes well for other sectors. Taking a cue from us other sectors like power transmission, oil and natural gas will start monetization of their assets and the huge capital required for India’s infrastructure can be unleashed,” NHAI’s Singh said.

The authority plans to launch the second auction in April, he added.

KPMG India in consortium with Ecorys India and HSA Advocates; and V R TECHNICHE in association with Indian Road Survey and Management were the advisors to the auction. 

 

Macquarie