Deal seen as India’s major asset M&A

Singapore’s Cube Highways & Infrastructure Pte. Ltd. has entered into an agreement to acquire 100 percent of Salem Tollways Limited (STL) and Kumarapalayam Tollways Limited (KTL), making it a major merger and acquisition in the infrastructure-attractive Indian market.

The agreement was signed on 20 Dec 2017 with IVRCL Ltd, owner of STL and KTL.

STL operates a 53.5 kilometer stretch between Salem and Kumarapalayam and KTL operates a contiguous 48.5 kilometer stretch between Kumarapalayam and Chengapalli as part of the National Highway 544 in the state of Tamil Nadu.

The roads are 20-year toll projects awarded after competitive bidding in 2005 for strengthening and widening two-lane highways to a four-lane configuration. Completed in 2010 and 2009 respectively, both roads have strong and established operational histories.

Commenting on the transaction, Gautam Bhandari, Director of Cube Highways and Partner of I Squared Capital said, “This transaction fits well within our strategy of investing in mature operational assets. The roads increase the geographical diversification of the Cube Highways portfolio and strengthen our presence in southern India.”

“We expect to benefit from significant operational synergies since both the roads are contiguous to each other,” said Dr. Harikishan Reddy, CEO of Cube Highways Advisors. “These roads benefit from a high proportion of captive traffic between two large industrial centres of Coimbatore and Chennai, which is demonstrated by the stable and robust growth on this corridor.”

The completion of the transaction is contingent upon fulfilment of certain customary regulatory and lender approvals.

Cube Highways is a Singapore based company investing in road and highway projects, along with select other infrastructure sectors in India.

The company, owns and operates nearly 1,300 lane-kilometers of toll roads, is formed by two leading global financial institutions, I Squared Capital and the International Finance Corporation (IFC).

I Squared Capital is an independent global infrastructure investment manager focusing on energy, utilities, telecommunications and transport in the America, Europe, and select high growth economies. The Firm has offices in New York, Houston, London, New Delhi, Hong Kong and Singapore. fii-news.com