Canadian pension fund manager Public Sector Pension (PSP) Investment Board and India’s National Investment and Infrastructure Fund (NIIF), on Wednesday (3 April), jointly said they are setting up a USD 2bn platform to invest in road projects in India.
ROADIS, PSP Investment’s roads development arm, will team-up with NIIF with an aim to invest in the recently introduced toll-operate-transfer (TOT) model, acquire existing road concessions, and look for investment opportunities. An email statement from NIIF said the effort is to create a large roads-platform in the country.
With 710 km of highways under ownership and management, ROADIS is among the largest European highway concession managers in India and is a wholly-owned subsidiary of PSP Investment, one of Canada’s largest pension funds.
Singapore-based Cube Highways, a platform floated by I Squared Capital and backed by International Finance Corporation and the Abu Dhabi Investment Authority (ADIA) operates about 1,700 km of highways in India and is the other large foreign player in the Indian roads sector.
In the email statement, José Antonio Labarra, CEO, ROADIS, said, “this agreement, which aligns with our growth strategy, strengthens our long-term commitment to India. NIIF is a partner that perfectly fits our profile given its commitment to infrastructure investment and the robust governance standards it follows.”
Sujoy Bose, MD & CEO, NIIF, said, “the Indian road sector has attracted significant global capital over the last two decades and will continue to offer large investment opportunities. The road network is a key enabler for the Indian economy to grow and sustain its position as the fastest growing major economy in the world, and this provides significant upside potential for investments, while creating value for users.”
In March 2018, Australia’s Macquarie group won the rights under the TOT model to manage 648km of national highways by bidding INR 96.81bn (USD 1.5bn) in an auction. The National Highways Authority of India (NHAI) had set a floor price of INR 62.58bn.
However, the second bundle of highways put up by the Indian government did not draw a similarly enthusiastic response as Cube Highways emerged the highest bidder with a bid of INR 46bn as compared to NHAI’s expectations of at least INR 53.62bn. NHAI is widely expected to go for a re-bidding of the second package once the general elections in India are over by 19 May.