CPPIB, CDPQ vying for GIP’s India road assets

29 July 2019 - 12:00 am UTC

Canadian pension funds Canada Pension Plan Investment Board (CPPIB) and Caisse de dépôt et placement du Québec (CDPQ) are the two remaining bidders vying to purchase New York-headquartered Global Infrastructure Partners’ (GIP) Indian roads portfolio, local media reported on 29 July.

 

The two pension funds have bid around INR 32bn (USD 466m) but valuations could come down to INR 26bn to INR 28bn due to the subdued growth in highway traffic, according to the reports.

 

Four suitors including CPPIB, CDPQ, India’s National Investment and Infrastructure Fund (NIIF), and Piramal Enterprises were preparing to bid for the roads portfolio, Inframation reported on 10 June.

 

CDPQ has been keen to establish its presence in India’s roads sector by winning at least one of the bids with either Essel or GIP, Inframation had reported. NIIF, as well as Cube Highways, the Indian roads and highways platform of New York-headquartered I Squared Capital, had joined the race to acquire three of Essel’s road projects, the same report also mentioned. Local media reported on 26 July that Essel was in discussions with NIIF.

 

GIP’s India roads portfolio – Highway Concessions One – comprises seven road projects. Five of these are toll roads while two are annuity projects, totaling 472km. These are spread across seven states and earned a consolidated revenue of INR 6.2bn in the financial year through March 2018, according to information on the company website.

 

The platform’s road projects include Ulundurpet Expressways in Tamil Nadu, Nirmal BOT in Telangana, Dewas Bhopal Corridor in Madhya Pradesh, Bangalore Elevated Tollway in Karnataka, Godhra Expressways in Gujarat, Jodhpur Pali Expressway in Rajasthan and Shillong Expressway in Meghalaya. GIP acquired the above projects when it bought the entire infrastructure portfolio of IDFC Alternatives in March 2018, marking its foray into India. The new entity, now called GIP India, manages two India-focused infrastructure funds. These are the India Infrastructure Fund and India Infrastructure Fund II.

 

The roads sector has seen a number of deals this year, the most recent one reported by Inframation on 1 July when CPPIB-owned IndInfravit Trust acquired nine road projects from Sadbhav Engineering for INR 66.1bn.

 

In March, Cube Highways agreed to acquire the heavily trafficked DA Toll Road from Reliance Infrastructure.

 

Besides the two deals mentioned above, there has been a steady trickle of single-asset deals with Cube Highways picking up a majority of the assets.

 

CPPIB said it does not comment on speculation while GIP and CDPQ did not respond to request seeking comment.

 

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