Brookfield plans to cut short India road trip

Six years after setting up a platform for its toll road assets, Brookfield Asset Management is looking to cash out. The Canadian asset manager aims to sell Peak Infrastructure, valuing the vehicle at Rs 8,700 crore ($1.2 billion) inclusive of debt, to cash in on the prevailing valuation uptick of similar assets, said people aware of the development. Peak Infrastructure owns five road assets.

Brookfield’s management has started discussions with various investment bankers and a formal mandate will be issued in a week. The formal sale process is expected to be launched by the middle of October, the people said. Brookfield is among the world’s largest asset managers.

Active investors in Indian road sector such as The Canada Pension Plan Investment Board, CDPQ, KKR, National Investment and Infrastructure Fund (NIIF) and GR

are likely to be approached for the sale, one of the persons said. A Brookfield spokesperson declined to comment.

The second wave of the Covid pandemic had hit toll collections, especially in April and May. As per calculations by rating agency , tolls fell sequentially by about 10% in April and close to 30% in May. Thereafter, there was a marked improvement, with traffic on highways reaching 90% of pre-Covid levels and crossing that in subsequent months. This has also prompted the government to shortlist the National Highways Authority of India (NHAI) as the flag bearer of the government’s recently announced asset monetisation programme.

It plans to raise Rs 30,000-40,000 crore through the sale and lease back of operational stretches over the next two years.

Established in 2015, Peak Infrastructure’s portfolio consists of toll roads that are under long-term concession agreements with NHAI such as the MumbaiNashik Expressway, Simhapuri Expressway, Rayalseema Expressway, Gorakhpur Infrastructure Co. and Kosi Bridge Infrastructure Co. Peak was set up after the acquisition of road assets from .

It includes up to 2,427 lane km of national highways and 103 toll booth operations that serve over 120,000 vehicles each day, said a company website. Another two roads — the Andhra Expressway and Rajahmundry Expressway — acquired from Gammon India, were successfully managed and handed over to NHAI. The portfolio is expected to clock Rs 1,000 crore in FY22. Depending on the valuation, Brookfield might also explore an InvIT, said one of the people in the know, on condition of anonymity.

In August 2015, Brookfield made its first entry into roads through the acquisition of six projects from Gammon. After two years, it acquired two road assets from Hyderabad-based KMC Constructions.

In 2019, Brookfield had tried to sell its marquee road asset, the 150 km MumbaiNashik Expressway. It held talks with several players such as Cube Highways and IRB Infrastructure but these didn’t lead to a deal.

Brookfield, which made its India entry in 2014, has deployed about $20 billion in the country till date. Half the amount was invested in infrastructure during the 2018-20 period. Besides roads, its major infrastructure investments include a Rs 25,215 crore investment in Jio Towers and the Rs 13,000 crore buyout of EastWest Pipeline (formerly Reliance Gas Transportation Infrastructure).

“Road traffic volume will grow 12-14% in the current fiscal, driven by economic recovery, continued industrial production, and increased preference for personal mobility fuelled by the pandemic, after declining 4-5% in the last one,” said a recent


Commercial traffic, which is closely linked to the macroeconomic environment, is expected to log healthy growth this fiscal. Personal mobility, on the other hand, is likely to gain preference over public transport or shared mobility due to pandemic-related concerns, thereby driving passenger traffic. With both these growth engines expected to fire, the sector’s growth prospects look brighter, it added.

The country has seen a large number of buyouts in the road sector in the last few years. In July, KKR acquired Highway Concessions One (HC1), which consists of seven highway assets with a total length of 487 km, owned by

Partners (GIP). NIIF made its debut deal in the road sector in November 2020 by acquiring Devanahalli and Dichpally tollways from the debt-laden Essel Group. Similarly, CDPQ acquired Shree Jagannath Expressway, a 67-kilometre toll road project from Bhubaneswar to Chandikhole in Odisha in January 2021, marking its first transportation investment in India. CPP Investments owns IndInfravit Trust, an infrastructure (InvIT), which currently holds a portfolio of 13 operational road concessions in Karnataka, Maharashtra, Rajasthan, Tamil Nadu and Telangana.

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