CPPIB leads race to buy Ashoka Concessions for Rs 5,500 crore

MUMBAI: Canada Pension Plan Investment Board has emerged the front runner to acquire toll roads developer Ashoka Concessions, and is likely to sign a deal at an enterprise value of Rs 5,500 crore, or $770 million, two people aware of the development said.

Existing shareholders — a private equity fund jointly managed by Australia’s Macquarie Group and State Bank of India, and listed infrastructure developer Ashoka Buildcon are set to sell their stakes of 34% and 66%, respectively, to Canada’s largest pension fund, they said.

Ashoka Concessions’ roads portfolio comprises 15 assets, including six operational build, operate, transfer toll projects and eight under-construction hybrid annuity projects.

Besides CPPIB, other contenders for the company include National Investment and Infrastructure Fund (NIIF), I Squared Capital-owned Cube Highways, Sekura Roads, and Canadian fund CDPQ.

Many global and domestic infrastructure investors were in early stages of negotiations to acquire Ashoka Concessions for an enterprise value of Rs 5,000-6,000 crore as revenue generating highway assets continue to get investor traction, as ET first reported in May 2019.


A CPPIB spokesperson declined to comment, while mails sent to Macquarie and Ashoka Buildcon did not elicit any response as of press time Sunday. EY India advises the investors to sell their stake.

A successful deal will be a relief to Ashoka Buildcon, which has consolidated debt of Rs 5,790 crore in FY19.

SBI Macquarie had invested Rs 800 crore in Ashoka Concessions in 2012. In 2016, the Macquarie fund had sold two operational toll road assets in south India — the Jadcherla Expressway in Andhra Pradesh and the Trichy Tollway project in Tamil Nadu — to Spain’s toll roads operator Abertis for a consideration of Rs 905 crore.

India’s road sector is expected to see Rs 1 lakh crore of investments between 2018 and 2022, rating company Crisil had said in March.

Toll road projects that Ashoka Concessions owns and operates include Belgaum-Dharwad, Dhankuni-Kharagpur, Durg Bypass, Chhattisgarh-Maharashtra border, Bhandara Road, Maharashtra-Chhattisgarh border, Jaora-Nayagaon and Sambalpur-Baragarh highways.

CPPIB is among the aggressive global investors in Indian infrastructure assets space. Its current exposure to the country stands at around $7.6 billion, or Rs 54,000 crore, with investments across public and private equity, real estate and infrastructure.

Earlier this month, CPPIB had agreed to invest up to $600 million in National Investment and Infrastructure Fund (NIIF) through the NIIF Master Fund.

In July, IndInfravit Trust — India’s first private infrastructure investment trust, where CPPIB holds 30% of units —had acquired nine operational road assets of Sadbhav Infrastructure Project (SIPL) at an enterprise value of Rs 6,610 crore. It is still not clear if this latest deal will also be routed through the same trust vehicle.

CPPIB has also invested close to $500 million in ReNew Power Ventures, the country's leading clean energy producer.