Cintra, a unit of Spanish infrastructure developer Ferrovial, has agreed to buy a 24 percent stake in IRB Infrastructure Trust from GIC, along with a similar stake in MMK Toll Road Pvt Ltd, the investment manager of the trust, IRB, said on March 14.
The secondary stake purchase is worth Rs6590 crore (approx $796 million), as per a stock exchange filing by IRB. Sources told Moneycontrol that GIC has made an IRR of over 20% in rupee terms on the part stake sale.
The acquisition is subjected to fulfilment of conditions and requisite regulatory and a third-party approvals, the IRB statement said.
An infrastructure investment trust (InvIT), IRB Infrastructure Trust operates road assets.
GIC first invested in the IRB Infrastructure Trust in August 2019 when it wrote a cheque of Rs 4,400 crore for a portfolio of nine toll roads.
This is the second investment by Ferrovial in the IRB group. In 2021, it acquired a 24.86 percent stake in the listed flagship of the group — IRB Infrastructure Developers — for 369 million euro.
IRB and GIC share the vision of delivering high-quality sustainable infrastructure projects, Cintra CEO Andres Sacristan said. “This investment in the trust complements and aligns better our relationship. We’ll keep leveraging our complementary strengths and expertise to capture further value from the growth that IRB is having, while we keep collaborating with each of GIC and IRB, respectively, in making the most of the pipeline ahead,” he said.
Law firm Resolut Partners acted as the legal advisor to GIC on the transaction.
Shreyas Bhushan, Partner at Resolut, said that the investment by Ferrovial highlights the continuing attractiveness of the Indian infrastructure sector for foreign investors.
"With interest rates rising across most key geographies, foreign investors in some quarters were becoming slightly circumspect of investing in infra. But this mammoth investment by Ferrovial, one of the biggest roads entity globally, should be a strong reminder of the promise which the Indian infrastructure story holds," said Bhushan.
The amount of capital that Indian infrastructure can absorb is huge, considering the pent-up demand over many years, he said. "Given the government’s keen focus on infra spending, we expect a lot more deployment (domestic and foreign) across various infra asset classes including roads, renewables and sub-sectors of digital infra," added Bhushan.
According to him, the deal also underscores the attractiveness of the InvIT structure, especially for foreign investors.
"The relatively light-touch regulation, tax optimal framework for upstreaming returns and the general comfort of SEBI oversight clearly make InvITs the most-preferred choice for infra investments," he said.
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