London-based sustainable infrastructure investor Actis has agreed to acquire a portfolio of six in-operation toll road projects in India. Welspun Enterprises Limited (WEL) is disposing of the assets for an aggregate enterprise value of US$775 million.
The portfolio has a mix of annuity and toll cash flows, with the projects located strategically across India, including in the most prominent North-South highway corridor.
This will be the first road investment in India from Actis’ Long Life Infrastructure Fund (ALLIF), which seeks to invest in stabilized operating assets, across multiple infrastructure sectors, that deliver a strong cash yield for investors and measurable environmental, social and governance (ESG) impact.
Aligning with this objective, five of the six toll roads have a hybrid annuity concession, whereby the concessionaire gets a fixed payout to ensure road availability. The concessions for the five projects were awarded by the National Highways Authority of India and have received a local AAA credit rating.
“The toll roads are well-diversified and strategically located, and they are a highly attractive addition to our portfolio that aligns perfectly with ALLIF’s investment mandate," says Actis partner Sumit Sen. "We look forward to pursuing similar long-life infrastructure projects in the future, including WEL’s balanced under-construction road portfolio.”
“This is a strong, first of its kind, investment for ALLIF, which fully aligns with the fund’s core objective – to invest globally in infrastructure assets that provide consistent yield for our investors," adds Adrian Mucalov, partner, head of long-life infrastructure, at Actis.
WEL, part of the Welspun Group, is an infrastructure development company focusing on road, water and wastewater segments. The company also has investments in oil and gas exploration. It has executed over 1,000 kilometres of road projects, and water supply projects.
The completion of the deal is subject to certain conditions, including approval from the lenders of Highway Projects as well as the National Highways Authority of India and the Public Works Department of the government of Maharashtra.
Actis' recent investments include the purchase of a 50% stake in Dubai-headquartered Emirates District Cooling Company and the acquisition of Ulug Energy in Turkey.