National Investment and Infrastructure Fund (NIIF), a quasi-sovereign fund manager backed by the Indian government, has struck its third deal since January to expand its highways portfolio.
NIIF said Tuesday it has acquired a 100% equity stake in the Shapoorji Pallonji Group’s SP Jammu Udhampur Highway Ltd through the NIIF Master Fund at an enterprise value of over $290 million.
The operational road in the union territory of Jammu and Kashmir (J&K) will be managed by NIIF Master Fund’s proprietary roads platform Athaang Infrastructure.
The deal expands the fund’s road portfolio to four assets with an aggregate revenue rate of more than $170 million per annum. SP Jammu Udhampur developed the highway project under concession from the National Highways Authority of India (NHAI) on a Build-Operate-Transfer (Annuity) basis.
It receives fixed, semi-annual payments from NHAI, providing steady and predictable cash flows.
Vinod Giri, Managing Partner, NIIF Master Fund, said, “We are now amongst the largest institutional investors in J&K with our two large road acquisitions. The acquisition reinforces our team’s strong underwriting capabilities in successfully closing a complex transaction involving simultaneous equity closure and refinancing of listed Non-Convertible Debentures (NCDs).”
The four-laned 64.5-km highway provides an essential link between Jammu and Srinagar. The highway includes a 1.4 km twin tube tunnel stretch.
“The asset fits well with NIIF Master Fund’s strategy to have a balanced portfolio with a mix of toll and annuity assets,” added Giri.
NIIF was supported by DSK Legal as legal counsel and PwC as finance and tax advisors.
Last month, NIIF Master Fund announced the acquisition of Navayuga Quazigund Expressway, another road asset in J&K, at an enterprise value of around $380 million. The fund’s roads portfolio includes the six-laned Devanahalli Tollway in Bengaluru and the four-laned Dichpally Tollway in Telangana.
The NIIF had sealed its first deal in the highways sector in late 2019 when it acquired two projects from Essel Group. The Devanahalli Tollway in Karnataka and the Dichpally Tollway in Telangana are also operated by Athaang Infrastructure, the Mumbai-headquartered proprietary roads platform incubated by the NIIF.
In April this year, the NIIF signed an agreement to acquire GVR Ashoka Chennai ORR Ltd for Rs 686 crore ($89.5 million) from Mumbai-listed Ashoka Buildcon Ltd.
GVR Ashoka Chennai ORR is a special purpose vehicle incorporated by GVR Infra Projects and Ashoka Buildcon Ltd to develop and operate a six-lane road project, Chennai Outer Ring Road Phase II, in Chennai, Tamil Nadu. It has a 20-year concession, which expires in March 2034, from the Highways and Minor Ports Development and the government of Tamil Nadu to implement the project under the build-operate-transfer annuity model.
The NIIF makes both direct investments in infrastructure and other sectors as well as Limited Partner commitments to private equity and venture capital funds. It manages more than $4.5 billion of equity capital commitments across a Master Fund, the fund of funds, and a Strategic Opportunities Fund (SOF).
The Master Fund mainly invests in operating assets in core infrastructure sectors such as transportation and energy. The SOF focuses on sectors such as financial services, food and agriculture, healthcare and education.
Earlier this year, the SOF made its maiden investment in the digital ecosystem with an investment in FirstCry. Last year, it invested $287 million in TPG-backed Manipal Hospitals. It had also pitched in to create two interlinked infrastructure-oriented debt finance companies.