Tata Realty & Infrastructure slowing on road acquisitions

In the past two years, Tata Realty and Infrastructure Ltd (TRIL) has been one of the regular names cited in the list of potential buyers in the market for road assets.

This might be changing. Investment bankers say it is getting slower and less aggressive in such bidding. 

“TRIL is in the market but we have seen the company lower its price bids for road projects substantially in the past six months or so. We have seen at least a 20 per cent dip in the bids quoted,” said an investment banker who deals with road projects, on condition of anonymity.
 

The recent Abertis Group deal to buy two road projects, Trichy Tollways and Jadcherla Expressway, from funds managed by State Bank of India and Macquarie, is an example. “TRIL was in the race for these two but its bids were lower to that of Abertis,” said a second investment banker, who also did not wish to be identified but agreed the company had slowed on acquisition in the past few months. 

Compared to others in the infrastructure segment, TRIL is a recent player, set up in 2007. “They could be going slow on new M&As (mergers and acquisitions) as they do not have many people to look at too many opportunities. They are open to the idea but are going slow. In addition, foreign firms and funds are turning out to be more aggressive, owing to lower yield expectations,” said the second investment banker quoted earlier.  

Sanjay Ubale, managing director of TRIL, said they continued to be on the lookout for M&A. “We have not changed our stand. We continue to be very positive as far as the road segment is concerned. There is definite interest from foreign entities but I would not say it is aggressive. We were never aggressive even in the heydays and it was always in line with the capacity of the projects; that does not change. We are currently looking at seven-eight assets but not all assets are financially attractive. We continue to look at not only greenfield (new project) but also brownfield (expansion) opportunities,” he said. 

Last week, the firm withdrew its bid for the Navi Mumbai airport project, along with some of the other potential bidders, citing “onerous” bid conditions among the reasons. Some of TRIL’s past acquisitions include three road assets bought from IVRCL for Rs 400 crore in November 2015 through a deal first agreed to in 2013. In a more recent deal, signed this November, TRPL Roadways, a TRIL subsidiary, intends to buy the entire stake in SMS Shivnath Infrastructure, a Special Purpose Vehicle which holds the Durg bypass road asset for $39.6 million, according to one of the bankers quoted earlier.