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The International Finance Corporation (IFC i)s considering an equity investment in a holding company, Road Holdco, developed by I Squared Asia Advisors Pte. Ltd. (ISQ), which will primarily acquire operating road assets in India.
The company may also acquire other transportation and logistics assets like parking facilities, logistics infrastructure, and other such assets. ISQ is currently in advanced stages of evaluating multiple operational toll roads to be acquired by the Road Holdco.
IFC is considering an equity investment in the Road Holdco of up to US$90 million. IFC will also consider providing refinancing for the debt of the roads that the Road Holdco will acquire. IFC's total debt investment is expected to be up to US$150 million.
The new road vehicle aims to support the critical roads infrastructure of the country, which is a priority for the Government of India. In order to achieve this objective IFC launched in mid august a $2.5 billion rupee financing program to strengthen capital markets and support infrastructure development.
The Indian road sector is in trouble, the proof is that twenty-one road PPP projects bid out by the National Highways Authority of India (NHAI) did not get a single bidder during the fiscal year 2013-2014. The Ministry of Road Transport & Highways and the NHAI have taken a number of steps for speedy completion of National Highway (NH) projects.
In addition the Reserve Bank of India (RBI) has advised all commercial banks to treat road sector debt as secured to enable banks to allocate a larger portion of lending to road sector and also to reduce the cost thereon. Concessionaires/developers have also been allowed for harmonious substitution and the re-schedulement of Premium quoted by them.
During the year 2013-14, NHAI had awarded 17 projects for a total length of 1435.84 kms of which two projects are on PPP mode.