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A host of private equity and infrastructure investment firms are in the queue to buy nine highway projects. The project is estimated to cost as much as USD 1 billion and has been put on the block by Sydney-based Macquarie Group. Cube Highways, Sekura Infrastructure Fund of Edelweiss Group, and private equity firms Actis and KKR have shown interest in buying the projects.
“The talks are in the preliminary stage, and Macquarie is in talks with potential buyers,” said the banker. “Due to tightening interest rates in India and the slowdown in traffic due to Covid-19 pandemic, the road assets are not getting a good valuation,” he added. The projects are in Andhra Pradesh and Gujarat.
Last year, it sold its 56.8% stake in Gujarat toll roads and 100 percent in Andhra Pradesh toll roads portfolio to the Adani group at an enterprise valuation of INR 23,110 crore, as per a business standard report. The portfolio of 972 km lane sold to Adani had a long concession life with established traffic in strategically located traffic corridors in western and southern India.
According to rating firm India Ratings, after two consecutive years of depressed margins due to the pandemic, road projects are expected to recover in FY 2023-24 by around 100 basis points as new contracts with revised pricing are executed. But the pace of margin recovery in the roads segment is likely to be slow, given the continued competitive intensity.
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