NIIF enters road and highway sector with acquisition of two Essel projects

The deal, done through NIIF Master Fund, is pegged at Rs 1,500-1,800 crore though the firms did not divulge the figure

The National Infrastructure Investment Fund (NIIF) has acquired Essel Devanahalli Tollway and Essel Dichpally Tollway from Essel Infraprojects, the wholly-owned subsidiary of Subhash Chandra’s debt-laden Essel group.

NIIF had earlier tried to enter in the highway sector by acquiring other operational highway projects either from private operators or through the toll-operate-transfer (TOT) monetisation mode of the government. With this acquisition, NIIF has taken its first step to build its portfolio in the road and highway sector, said an official statement. These projects will be managed by Athaang Infrastructure, NIIF’s proprietary road platform.   

The deal, done through the NIIF Master Fund, is estimated to be Rs 1,500-1,800 crore though the companies did not divulge the figure. “The debt for Essel Infraprojects has been reduced substantially,” said a person close to the development.

Essel Devanahalli Tollway is an arterial 22 km six-lane toll road in Karnataka, connecting Bengaluru city and its airport. The road, part of NH44 (erstwhile NH7), has been in operation for over six years and caters to the traffic between Bengaluru City and the airport. 

Essel Dichpally Tollway is a 60 km four lane toll road in Telangana which has been in operation for over seven years, linking two industrial hubs of Hyderabad and Nagpur and serves long distance commercial traffic.

NIIF, an investment platform for international and Indian investors anchored by the Union government, manages over $4.3 billion of equity capital commitment across its three funds – Master Fund, Fund of Funds and Strategic Opportunities Fund, each with its distinct investment strategy. 

NIIF Master Fund primarily invests in operating assets in core infrastructure sectors like transportation and energy, while NIIF Fund of Funds invests in funds managed by best-in-class fund managers focused on some of the most dynamic sectors in India such as climate infrastructure, middle-income and affordable housing, digital consumer platforms and other allied sectors. Its third fund NIIF Strategic Opportunities Fund is a private equity fund.

In addition to the road sector platform, NIIF Master Fund has also anchored platforms in ports, logistics, renewable energy and smart meters sectors. Vinod Giri, managing partner, NIIF, said, “Athaang will invest in strategic assets and develop a portfolio including mature operational assets, annuities/hybrid annuities, large size expressways and highways with greenfield and brownfield expansion requirements.”