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Wed December 01 2021

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Ferrovial bids for stake in Indian road business

27 Oct Ferrovial’s toll road subsidiary, Cintra, has offered to pay €364m (£307m) for almost a quarter of Indian company IRB Infrastructure Developers.

IRB is a leading toll road developer and operator in India, where it manages 23 projects and around 2,000km of toll roads.

Cintra has filed a bid to acquire up to 24.9% of IRB Infrastructure Developers in a deal that would be conducted in the form of a preferential share issue. If the deal is completed, Cintra will become a key minority shareholder with representation on the board.

“This investment in IRB Infrastructure Developers represents a great opportunity for Cintra to expand into a new market for us — India — that has very promising fundamentals for toll road development,” said Andrés Sacristán, CEO of Cintra. “IRB has a portfolio of high-quality assets and a platform with the capability to capture some of the strong growth expected in this sector. Cintra would work with IRB to enhance its competitive position in the Indian market.  Our international experience as an investor and operator would optimise IRB’s operational capacity and ESG compliance, a field in which Cintra and Ferrovial are international leaders.”

IRB Infrastructure Developers was founded in 1998 and is listed on the Bombay Stock Exchange. It is a pioneer in the industry, having developed the country’s first build-operate-transfer concession. It currently has 23 toll road projects in its portfolio, representing around 20% of the ‘Golden Quadrilateral’, a road network linking the country’s main economic development centres. Its assets include the Mumbai-Pune Expressway, one of India’s main highways. Last year it reported €630m in revenue, and €310m in earnings before interest, taxes, depreciation, and amortization (EBITDA). Its business model integrates concessions and construction. Its construction division, which currently works exclusively on the company’s own concession projects, has built 14,000km of road.

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India’s infrastructure development plans have been multiplying in recent years, and the P3 model of public-private partnerships is expanding. Over €240bn are expected to be invested in toll roads in 2022-2025, with privatizations set to exceed €18bn. “India combines government policies to promote infrastructure development, a favourable macroeconomic environment, and a regulatory and legal framework that encourages private investment and management under various concession models,” said Sacristán.

Completion is subject to Cintra, IRB Infrastructure Developers and IRB´s majority shareholder Virendra D. Mhaiskar (and his family and holding company) executing a definitive agreement. The agreement would then need to be approved by the company’s shareholders and cleared by the competent authorities and lenders.

Final completion is projected to take place in the first quarter of 2022.

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