Ferrovial arm Cintra to acquire 24% stake in IRB Infra Invit from GIC

The trust is an infrastructure investment trust (InvIT), a special investment vehicle in which IRB Infra holds a 51 per cent stake and 49 per cent equity is held by affiliates of GIC

The Singaporean investment fund GIC and its affiliates will sell nearly half of their 49 per cent stake in IRB Infrastructure Trust to Cintra, a subsidiary of the Spanish infrastructure giant Ferrovial, according to a statement by IRB Infrastructure Developers (IRB Infra) on Thursday.

“Cintra, a subsidiary of Ferrovial, has entered into definitive documents to acquire 24 per cent from GIC affiliates in IRB Infrastructure Trust as well as a 24 per cent stake in MMK Toll Road, which is the investment manager of the trust. Completion of the acquisition is subject to the fulfilment of conditions precedent, including receipt of requisite regulatory and third-party approvals,” IRB Infra said.

The trust is an infrastructure investment trust (Invit), a special investment vehicle in which IRB Infra holds a 51 per cent stake, and affiliates of GIC hold 49 per cent equity.

According to a senior executive and spokesperson for IRB Infra, the deal was planned several months ago.

As of March 31, 2023, the trust had assets valued at Rs 18,900 crore, of which Cintra’s eventual stake of 24 per cent would translate into a deal size of Rs 4,600 crore.

Since the Invit has added five more assets to its portfolio, an additional amount to the tune of Rs 2,000 crore has been included in the deal, taking the total to approximately Rs 6,590 crore, the executive told Business Standard.

According to IRB Infra’s exchange filing, 24 per cent of the invested equity in five additional assets amounts to Rs 1,200 crore, along with Rs 860 crore of outstanding equity commitments for projects under development or financial closure.

The deal is reportedly expected to be completed by the end of April.
 

“Alongside Cintra and IRB, a leader in Indian road infrastructure, we look forward to our trust developing a greater network of roads and enhancing infrastructure in India. As a long-term global investor, GIC has been investing in India since the 1990s. India remains a key market given its strong economic fundamentals and infrastructure development potential,” a senior executive of GIC was quoted as saying by IRB Infra.

Indian Invits, especially in the highway sector, have been seeing massive investments owing to the growing order books of infrastructure developers, the need to raise funds rapidly, and the tax and regulatory benefits offered by the instrument.

“With a large National Highways Authority of India pipeline of Rs 2 trillion in build-operate-transfer assets and 46 toll-operate-transfer (majority yet to be awarded), the synergies of a domestic player, a financial investor, and a strategic investor will optimise project planning and selection,” IRB Infra said in an exchange filing.

Ferrovial also owns a 24.86 per cent stake in IRB Infra itself, which it acquired in 2021.