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MUMBAI: The US-based private equity giant Kohlberg Kravis Roberts & Co (KKR & Co. Inc) is set to win the rights to run a four-lane, 361 km-long highway stretch linking Lalitpur with Lakhnadon on National Highway (NH) 26 in Uttar Pradesh and Madhya Pradesh on a toll, operate and transfer (ToT) mode, multiple sources said.
KKR placed the highest price bid for Rs4,181 crores to emerge the successful bidder for ToT bundle 12 when the bids were opened earlier this week, a government official said.
KKR quoted for the project through Highway Concessions One Pvt Ltd, a platform that manages and operates road assets, which it acquired from Global Infrastructure Partners India LLP in 2021.
The project – the longest single road asset yet offered by the National Highways Authority of India (NHAI) – will be awarded for a concession period of 20 years.
KKR bettered the price offers from Cube Highways, Canadian pension fund Caisse de dépôt et placement du Québec and Mumbai-based IRB Infrastructure Developers to become the highest bidder for ToT bundle 12.
Separately, Singapore-based Cube Highways and Infrastructure Pte Ltd, has placed the sole bid for Rs1,850 crore for operating the 84 km-long Allahabad Bypass in Uttar Pradesh for 20 years under ToT bundle 11, the government official said.
Under the ToT model, the right to collect user-fee or toll on selected stretches built through public funding will be auctioned and assigned to a concessionaire for 20 years against an upfront payment of a lump-sum amount (concession fee) to the government.
The official said that a single bid for a project can be accepted per government rules provided the bid is above the initial estimated concession value (IECV) calculated by the highway development agency.
IECV refers to the discounted value (discounted at a rate equal to three percent above the bank rate for debt and a normative rate for equity return) of the net free cash flow expected to be generated by the project from the valuation date until end of concession period of 20 years, as estimated by NHAI.
“A decision on accepting the price bid offered by a single bidder for a highway project will be based on the IECV value. If the price quoted by the single bidder is higher than the IECV, we will award the project,” the official said, asking not to be named.
The NHAI has so far raised Rs31,200 crore through the ToT mode of monetising operating highway projects.
NHAI has called bids for ToT bundles 13 and 14 involving 300 kms of highway assets.
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