Almost a year since it first initiated talks, the Subhash Chandra-backed Essel Group has managed to sell off two road assets — Essel Devanahalli Tollway and Essel Dichpally Tollway — to the National Investment and Infrastructure Fund (NIIF). This is the first investment by NIIF in the road and highways sector.

Financial details of the transaction were not disclosed, but industry watchers peg this deal to be around ₹2,000 crore. The deal also marks a reduction in the debt of Essel Group by around ₹3,000 crore. In October 2019, Essel had debt of ₹7,000 crore.

The acquisition also marks NIIF’s entry into the roads and highways sector, and the deal was done through the NIIF Master Fund. The acquired projects will be managed by Athaang Infrastructure, NIIF’s proprietary roads platform, backed by a team of experienced professionals, it said in a statement. NIIF is a collaborative investment platform for international and domestic investors anchored by the Centre, and manages $4.3 billion across its three funds — master fund, fund of funds and strategic opportunities fund.

Essel Devanahalli Tollway is a 22-km six-lane toll road in Karnataka, connecting Bengaluru city and the airport. It is a part of NH-44 and has been in operation for over six years. Essel Dichpally Tollway is a 60-km four-lane toll road in Telangana and has been in operation for over seven years, connecting Hyderabad and Nagpur. “Athaang will invest in strategic assets and develop a portfolio including mature operational assets, hybrid annuities, large-size expressways and highways with greenfield and brownfield expansion requirements,” Vinod Giri, Managing Partner, NIIF said.

In September 2019, NIIF had submitted a binding bid to purchase these road projects. Essel’s infrastructure arm, Essel Infraprojects, has 14 road projects, of which six are annuity projects in a combination of national and State highways.

Debt repayment

Industry sources told BusinessLine that Essel was looking at an enterprise valuation in the range of ₹11,000-12,000 crore for all these road assets. In addition to NIIF, Essel Infraprojects has already sold three of its road projects to Caisse de dépôt et placement du Québec, Canada’s second-largest fund manager, in a deal valued at about ₹3,500 crore. Also, in August 2019, Essel sold off its solar assets to Adani Green Energy Limited for an enterprise value of ₹1,300 crore.

Additionally, last year the Essel Group also put on the block two operating transmission lines to repay the debt. Last month, in an attempt to recover dues of ₹1,500 crore, YES Bank put prime properties of Essel Group on sale.

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