Indian roads
CDPQ to will purchase three road projects from Essel for $508.5m. Credit: Pratapkagitha.

Canadian institutional investor Caisse de dépôt et placement du Québec (CDPQ) is reportedly set to acquire three road projects from Essel Highways for an enterprise value of almost Rs35bn ($508.5m).

Financial Express reported that the three road projects being acquired by CDPQ are state highways Lebad-Jaora in Madhya Pradesh and Essel Dichpally Tollway in Telangana, and a national highway, Essel Devanahalli Tollway, in Bengaluru.

The deal is expected to be signed before the end of this month, report said.

A subsidiary of Essel Infraprojects, Essel Highways formed in 2007. It operates road projects with more than 4,400 lane kilometres across six states in India.

In April, reports emerged that Essel Group was in talks with Cube Highways and CDPQ to sell three of its toll roads to mop up funds to reduce its debt burden.

Disposal of road assets will enable Essel Infraprojects to cut its debt to almost Rs80bn ($1.16bn) from Rs114.66bn ($1.67bn).

Essel Dichpally Tollway witnessed av19% increase to toll revenue during 2017-2018. The road was previously known as Navayuga Dichpally Tollway.

Essel Devanahalli Tollway reported a 13% rise in toll revenues to Rs1.83bn ($26.6m) in FY2018. The road has also changed its name, from Navayuga Devanahalli Tollway.

The Lebad-Jaora project involves increasing the SH-31 to four lanes on a build, operate and transfer (BOT) basis in the Indian state of Madhya Pradesh. The concession period for the road is 30 years, inclusive of the construction period of two years.

Indian road sector has witnessed a series of merger and acquisitions lately. Very recently, IndInfravit Trust signed an agreement to buy nine operational road projects from Sadbhav Infrastructure Project for approximately $959m.

Last month, Reliance Infrastructure announced that it will conclude the sale of Delhi Agra (DA) toll road to Singapore-based Cube Highways and Infrastructure for Rs36bn ($522.3m) by August. The deal was initially announced in March.