Infrastructure companies will face unusual competitors when they bid for the National Highways Authority of India’s mega road projects.
Financial investors like Macquarie SBI Infrastructure Fund and US-based First Pacific Fund have joined the 13 consortia which have submitted a pre-qualification bid for the six-lane expansion of the Rs 5,134-crore Kishangarh-Udaipur highway.
NHAI floated a tender inviting bids for this project last week.
Traditionally, infrastructure funds have either picked up equity in projects or invested in infrastructure companies. Experts said private equity funds which have been focusing on infrastructure are looking to become developers themselves.
“They have access to large funds and they also understand the Indian market. But it will be interesting to see if these financial investors would be qualified. Government guidelines might differ for funds and normal developers. A fund basically manages money on behalf of other people. I guess someone needs to take a call whether the credentials of the funds are significantly beneficiary to the project,” said Kuljit Singh, partner, Transaction Advisory Services, Ernst & Young.
Macquarie SBI Infrastructure Fund has a corpus of $1 billion to invest in infrastructure projects in India. Australia's largest investment bank, Macquarie also has the experience of developing infrastructure projects internationally. A spokesperson of the company refused to comment on the development. But sources said this interest of financial investors could continue to other mega road projects as well.
Infrastructure majors like Larsen and Toubro, GMR and Jaypee Infrastructure and foreign companies like IJM Malaysia have bid for this project.
However, many other companies preferred to go in for a consortia. Hindustan Construction Company Infrastructure has partnered with Egyptian company Orascom and French construction major Vinci to bid for this project. An HCC Infrastructure spokesperson confirmed this development. Other companies did not respond to e-mailed queries.
Hyderabad-based GVK has partnered with American company Belford Construction. IRB Infrastructure has announced a partnership with Reliance Infrastructure to bid for this project.
“We are bidding in a consortium because it is a very big project. Instead of going for a foreign partner, we thought we can join hands with an Indian company like Reliance Infrastructure, which has a good exposure in India,” says Virendra D Mhaiskar, Chairman, IRB Infrastructure.
The government plans to seeks bids for nine mega road projects. The minimum size for these projects is 700 kilometres and would amount to Rs 4,000 crore. The projects has been planned under the fifth phase of the National Highways Development Programme — converting 6,500 kilometers of existing four-lane highways into six lanes, including 5,700 kms of the Golden Quadrilateral.
