Tata Realty buys Durg Bypass road project from SMS Infra
Tata Realty and Infrastructure Ltd, or TRIL, a fully owned subsidiary of Tata Sons, has purchased the Chattisgarh-based Durg Bypass road project for an enterprise value of Rs 800-850 crore, two people with direct knowledge of the development said. This was started in former Tata Sons chairman Cyrus Mistry’s tenure, and will see its closure in his successor’s period.
“The equity value of the deal is pegged at Rs 280 crore, while the rest is in debt. Global infrastructure company ISquared Capital was also in the race to buy the asset,” said one of the people with direct knowledge of the development. Ambit Capital is the exclusive advisor to the deal.
TRIL has bought the two-lane 18.4 km toll road by picking up 51.6% stake from its owner, Nagpur-based SMS Infrastructure, while the rest 48.4% is owned by private equity partner IDFC Alternatives Fund. TRIL is awaiting the approval from National Highway Authority of India (NHAI). In 1998, IDFC had invested in the Durg Bypass, first build-operate-transfer project by NHAI, which has a toll lease period until 2031.
The exit of promoters is the first after the government unveiled its new exit policy in 2014 for highway developers. Earlier, BOT developers had to mandatorily maintain 26% stake in the project throughout the concession period.
TRIL, which started with real estate development, primarily commercial, has been aggressive in building a road portfolio after the government announced various investor friendly policies and many original promoters were forced to sell their debt ridden assets by their lenders for fear of turning non-performing assets. Many global pension funds such as Brookfield Asset Management, Morgan Stanley Infrastructure fund and Canadian Pension fund have purchased many toll-based road assets.