Mumbai : 

SBI Macquarie Infrastructure Trust has acquired 74% stake in a Trichy road project developed by IJM of Malaysia and Shapoorji Pallonji  for Rs 275 crore. This is SBI Macquarie’s third buy in the road space in the last one year.

India’s road sector is abuzz with talks of mergers and acquisition, with smaller and more aggressive bidders piling up orders that have run into viability issues, creating an opportunity for financial and strategic investors to shop around for distressed projects.

“Trichy Tollway project has so far made losses but the project is up and running and there are no execution risks involved. Given the toll collections, the valuation looks attractive,” a source close tot the development told ET.

Trichy Tollway Private is a 50:50 joint venture between IJM and Shapoorji Pallonji. The project entails quadrupling the two-lane 92.75 km stretch on National Highway 45, and subsequently operating and maintaining it for 20 years under a concession with National Highways Authority of India . The project started commercial operation in September 2009 and has three years of operating history.

SBI Macquarie bought almost equal stake from the two JV partners, reducing their collective stake to 26%. Post the acquisition, SBI Macquarie has roped in Feedback Brisa Highways OMT, a JV between Feedback Infrastructure and Brisa, Auto Estradas de Portugal SA, to operate and maintain the project.

SBI Macquarie Infra is managed by a JV established in 2008 between State Bank of India, Macquarie Capital Group and International Finance Corporation. It had earlier bought 35% stake in Ashoka Buildcon’s roads arm for Rs 800 crore. It also acquired 74% stake in GMR’s Jadcherla Expressways for Rs 203 crore.

Cash-strapped infrastructure developers are in the market looking for equity investment in 40 projects. Many of these projects are up for sale because of lower-than-expected toll collection, rising cost of credit and bottlenecks in land acquisition.

A few highly leveraged developers are also scouting for investors to raise funds to finance other projects. In the past, companies like Hindustan Construction Company and Ashoka Buildcon  have inducted equity investors for their subsidiaries.

source: http://www.articles.economictimes.indiatimes.com / The Economic Times / Home> News> Economy> Infrastructure / by Rachita Prasad, ET Bureau / November 11th, 2013