Canadian pension fund CPPIB, Macquarie, Cube in advanced talks to acquire NIIF’s $1.2 billion road portfolio

Canadian pension fund CPPIB, Macquarie in advanced talks to acquire NIIF’s $1.2 billion road portfolio

Canadian pension fund CPPIB, through its infrastructure investment trust (InvIT), Cube Highways and Macquarie Asset Management, are engaged in separate talks to acquire the maiden roads portfolio of the Indian government backed National Investment and Infrastructure Fund (NIIF), said sources aware of the development, adding that the talks are at an advanced stage.

The portfolio of five road projects is likely to fetch an enterprise valuation of up to Rs 10,000 crore (approx $1.2 billion), the sources said.

“CPPIB, Cube and Macquarie are the only suitors left in the race now. CPPIB is looking to acquire the portfolio through its InvIT - Indinfravit - where it holds a majority stake. The talks are at a very advanced stage and NIIF is likely to soon pick one of the suitors to go ahead with the sale,” said one of the sources.

The sale of the roads portfolio coincides with another major asset sale that NIIF is undertaking.

The quasi-sovereign wealth fund is also in talks to sell its stake in Ayana Renewable Power, where NIIF holds a 51 percent stake, with the rest being held by British International Investment (formerly CDC Group) and Eversource Capital-managed Green Growth Equity Fund.

Also Read: ONGC, NTPC Green Energy may come together to bid for Ayana Renewable

“The two major portfolio sales - roads and renewables - are NIIF’s efforts to show returns to investors as the platform is planning to raise a new fund in the near term,” the source added.

The two portfolios are owned by NIIF’s Master Fund, which has a corpus of $2.34 billion and is backed by marquee investors such as Abu Dhabi Investment Authority, Temasek, Ontario Teachers’ Pension Plan, Australian Super, Canada Pension Plan Investment Board, Public Sector Pension Investment Board, Development Finance Corporation, ICICI Bank Limited, HDFC Group, Axis Bank Ltd and Kotak Life Insurance Company Ltd.

The fund primarily focuses on core infrastructure sectors and has made investments across roads, ports and logistics, renewables and smart metering space.

Emails sent to NIIF, CPPIB, Cube did not elicit a response. Macquarie declined to comment.

NIIF road portfolio

These operating road assets are housed under Athaang Infrastructure, a company sponsored by NIIF’s Master Fund.

Athaang holds five assets with a total road length of over 230 kilometres spread across north and south India.

These include two major assets in the state of Jammu and Kashmir acquired separately by the fund in 2022 - the 16.3-kilometre Quazigund Banihal Expressway acquired from Navayuga Engineering in July 2022 for $380 million (Rs 3,163 crore) and the 64.5-kilometre Jammu Udhampur Highway acquired by Athaang in August 2022 from the Shapoorji Pallonji Group for $290 million (Rs 2,414 crore).

These projects are amongst the largest annuity projects awarded by the National Highways Authority of India (NHAI).

NIIF also operates the 73-kilometre Kashi Tollway in Uttar Pradesh that connects Prayagraj and Varanasi, which it won under the Toll-Operate-Transfer (TOT)  monetisation programme of NHAI for a value of Rs 3,144 crore in January 2023.

Other assets include the 60-kilometre Dichpally Tollway in Telangana and the 22-kilometre Devanahalli Tollway in Karnataka, which were acquired from the Essel Group in 2020. The former connects Hyderabad to Nagpur while the latter connects Bengaluru city to its airport.

Biggest road deal 

At $1.2 billion, the NIIF’s sale of its road portfolio will be the biggest road deal in the country so far.

In January, Highway Infrastructure Trust, an infrastructure investment trust (InvIT) backed by private equity firm KKR, said that it has agreed to acquire a dozen road projects from PNC Infratech Ltd and PNC Infra Holdings Ltd for a total enterprise value of Rs 9,005.70 crore (approx. $1.1 billion).

In June 2023, IndInfravit, the infrastructure investment trust set up by Larsen & Toubro, acquired four road projects owned by Canadian investor Brookfield for Rs 8,270 crore.