Actis looks to buy Welspun’s road assets for up to ₹10,000 crore

Industry:    

Private equity investor Actis is in advanced talks to buy six road assets of Welspun Enterprises Ltd for an enterprise value of ₹8,000 crore- ₹10,000 crore, said two people aware of the development, requesting anonymity.

The BK Goenka-led infrastructure and energy firm’s road assets, which are up for sale, include five hybrid annuity model (HAM) roads and one build-operate-transfer (BOT) project, they said.

“Talks between Actis and Welspun are at an advanced stage. Due diligence and negotiations on commercials will be completed soon. Welspun expects to close the sale process by end of March. The equity value of the transaction is expected to be well over ₹2,000 crore,” said one of the two people cited above.

“Actis is among the most active investors looking for road projects in India and is involved in at least three large-sale processes. They have a lot of capital they are looking to deploy in yield-bearing infrastructure assets in India and roads are currently a very attractive option for such investors. For Welspun, the monetization will help reduce its group-level debt and recycle capital for construction projects in its pipeline,” the person said.

Emailed queries to Actis did not elicit any response till press time.

A spokesperson for Welspun Enterprises declined to comment on the talks with Actis but said that “considering our asset-light approach, we are in talks with global investors to unlock the value from our completed projects through sale at the right time.”

“We remain optimistic about our HAM and BOT portfolio. Backed by our strong project-execution capabilities, we recently completed our fifth HAM project in Amravati. Our company’s projects that have achieved PCOD/COD (provisional commercial operation date) are well positioned to generate revenue and deliver optimum value to stakeholders. With another BOT project likely to achieve PCOD in February, we will have enabled projects worth more than ₹8,800 crore to generate revenue and profits,” the spokesperson said.

India’s roads and the broader infrastructure sector are seeing major interest from foreign investors driven by the promise of higher yields at a time when return on investment remains historically low in developed markets, said the second person.

Mint reported last week that investors, including Actis, Canada Pension Plan Investment Board (CPPIB) and I Squared Capital-backed roads operator Cube Highways have entered the final round of negotiations to acquire Peak Infrastructure, a portfolio of operational road assets owned by Canadian investor Brookfield. The portfolio comprising five assets, is expected to fetch an enterprise value of $1.2 billion-$1.5 billion.

Cube, the largest investor in road projects in India, has been in talks with pension funds and sovereign wealth funds to raise up to $1 billion through an infrastructure investment trust, Mint reported on 23 September. Canada’s British Columbia Investments is among those which have evinced interest.

In November, the National Highways Authority of India said that CPPIB and Ontario Teachers’ Pension Plan will be anchor investors for its first InvIT, with 25% equity each. The NHAI InvIT raised ₹6,000 crore through the offering.

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