PNC Infratech, a leading infrastructure development company, has secured approval from the National Highways Authority of India (NHAI) to transfer its full 100% stake in three Uttar Pradesh-based road project subsidiaries to Highways Infrastructure Trust (HIT), a prominent Infrastructure Investment Trust (InvIT) managed by KKR & Co. This approval is a key step in a major Rs 9,005 crore deal, involving the divestment of twelve road assets. The deal will streamline PNC Infratech’s portfolio and pave the way for future infrastructure developments.
NHAI Approval and Strategic Move for PNC Infratech PNC Infratech announced on Friday that it had received NHAI’s official approval to transfer its complete ownership of three special purpose vehicles (SPVs) to Highways Infrastructure Trust. These three subsidiaries are:
- PNC Bithur Kanpur Highways Private Ltd
- PNC Gomti Highways Private Ltd
- PNC Aligarh Highways Private Ltd
This approval forms part of a much larger strategic move that involves the divestment of twelve road assets under a deal valued at Rs 9,005 crore. The assets are part of a broader transaction between PNC Infratech, its subsidiary PNC Infra Holdings, and HIT, which is managed by global investment giant KKR & Co. These assets span key National and State Highways in various Indian states, including Uttar Pradesh, Karnataka, Madhya Pradesh, and Rajasthan.
Details of the Rs 9,005 Crore Deal The deal, which was signed in January 2024, encompasses a total of twelve road assets, including eleven National Highway (NH) Hybrid Annuity Model (HAM) projects and one State Highway Build-Operate-Transfer (BOT) Toll asset. The total length of the roads involved is approximately 3,800 lane kilometers. The deal is poised to significantly benefit both PNC Infratech and Highways Infrastructure Trust by diversifying investment opportunities and enhancing infrastructure connectivity.
The National Highways Authority of India (NHAI) has already approved the change in control for three of these assets, marking a major milestone in the deal. As part of the regulatory requirements, PNC Infratech must also secure ‘change in control’ approvals from highway authorities and obtain no-objection certificates (NOCs) from the lenders involved in these projects.
Progress of the Transaction and Future Expectations According to sources close to the deal, PNC Infratech has already fulfilled several key conditions for the divestment. The company is in the process of obtaining the remaining approvals, with expectations of securing additional ‘change in control’ approvals from NHAI for seven more assets by mid-December 2024. With the majority of the NOCs from the lenders already in place, the company is optimistic about completing the sale of ten of the twelve assets by the end of the current financial year, i.e., March 31, 2025. This will cover approximately 85% of the total deal value, which is expected to provide significant cash flow and growth potential for both entities.
The final completion of the remaining two assets is anticipated to occur by the first half of FY26.
What is an Infrastructure Investment Trust (InvIT)? Infrastructure Investment Trusts (InvITs) are investment vehicles that function in a similar manner to mutual funds but focus specifically on infrastructure assets. These trusts pool money from investors and invest in long-term infrastructure assets that are expected to generate consistent cash flows over time. HIT, which is controlled by KKR & Co., is one of the leading InvITs in the infrastructure sector, and this partnership with PNC Infratech aims to enhance the growth of road infrastructure while attracting investor interest.
Impact of the Deal on India’s Road Infrastructure Development The strategic partnership between PNC Infratech and Highways Infrastructure Trust is poised to have a lasting impact on India’s road infrastructure sector. With a focus on increasing connectivity and enhancing the efficiency of transportation, the deal is expected to improve national and state highway networks across various regions. The large-scale divestment is also in line with the Indian government’s ongoing efforts to boost infrastructure investment and improve the country’s road networks, which are essential for economic growth and development.
This deal highlights the growing role of Infrastructure Investment Trusts (InvITs) in India’s infrastructure market, with global investors like KKR becoming increasingly involved in the sector. The partnership will allow for long-term infrastructure maintenance and development, ensuring that road projects remain operational for years to come.
Conclusion PNC Infratech’s successful acquisition of NHAI’s approval to transfer its 100% stake in three road project subsidiaries marks a key milestone in a significant Rs 9,005 crore deal with Highways Infrastructure Trust. This move reflects PNC Infratech’s commitment to enhancing infrastructure connectivity in India and diversifying its portfolio of road assets. The ongoing deal, along with the involvement of global investors like KKR, is expected to boost the country’s road infrastructure, drive economic growth, and attract further investments in India’s expanding infrastructure sector.
Source:
Economic Times, Link to article