Actis sells its stake in Indian joint venture to Tata Opportunities Fund
Three years ago, the private equity firm Actis and Tata Realty & Infrastructure (TRIL) (Tata Group) formed a $200 million JV to spend $2 billion in building roads over five years. Now Actis is selling to its stake in the joint venture to the Tata Opportunities fund (TOF). The reason behind the sale is that Actis has moved away from roads into power generation and distribution.
Currently, (TRIL), a 100% subsidiary of Tata Sons, owns 65% of the venture called TRIL Roads Pvt Ltd while Actis owns the rest. TRIL was Tata Sons' initial vehicle for its foray into infrastructure and real estate development.
Last month TOF raised $600 million from third party sovereign wealth funds, financial institutions, wealthy individuals and global corporations across North America, Asia and Middle-East.
London headquartered Actis had invested $77.5 million (Rs 345 crore) for its minority stake, in what was then its first investment in the Indian infrastructure space. This money was deployed from its $750-million (Rs 3,333 crore) emerging markets focussed infrastructure fund.
Despite its initial ambitious plans, TRIL Roads and Actis till date has built only one project, the 110-km Pune-Solapur highway with Italian company Atlantia SpA. But with TOF on board, TRIL Roads plans to pursue inorganic opportunities in the sector.
In April this year, IVRCL entered into an agreement with TRIL Roads to transfer control in 3 road projects. TRIL Roads will separately buy 74% in Salem and Kumarapalayam Tollways. However, for the Changapally-Wallayar Tollways, initially TRIL Roads will pick up only 49% and upon completion of the project in the next 5 months, it will hike its stake to 74%. After 2 years, IVRCL will exit entirely as the model concession agreement signed post 2009 allows it to do so. The deal is just pending the lenders nod.