KKR-backed Highways Infra Emerges as Frontrunner to Acquire 316-km Long Highway Asset in ToT 12 Auction


Mumbai, July 27, 2023, 12:26 AM IST: Highways Infrastructure Trust (HIT), an infrastructure trust owned by global fund KKR & Co, is poised to secure a significant win in the latest Toll-Operate-Transfer (ToT) auction conducted by the National Highway Authority of India (NHAI). According to sources familiar with the matter, KKR-backed Highways Infra is the highest bidder with an impressive offer of ₹4,181 crore for a 316-km long highway asset in ToT 12 auction.

The asset under consideration is the Lalitpur-Lakhnadon stretch of NH26, located in the state of Madhya Pradesh. The bid amount of ₹4,181 crore signifies KKR’s strong interest in acquiring this particular road asset, which has been part of the ToT auction conducted by NHAI.

The ToT model, initiated by the NHAI, allows the monetization of operational highway assets by transferring them to private entities for a specified concession period. These entities, in turn, collect tolls or annuity payments from users during the concession period. The funds generated through ToT auctions are reinvested in new highway projects, contributing to the overall expansion and development of the road infrastructure in the country.

HIT’s potential acquisition of the Lalitpur-Lakhnadon highway asset is seen as a strategic move that aligns with KKR’s strong focus on infrastructure investments. The global fund has been actively investing in India’s infrastructure space, recognizing the immense potential and long-term growth prospects offered by the country’s burgeoning infrastructure sector.

The project under ToT 12 comprises a mix of toll road and annuity projects with robust counter parties. Four projects are linked with the NHAI, while the Ministry of Road Transport and Highways (MoRTH) and Madhya Pradesh Road Development Corporation (MPRDC) each have one project. The toll road projects boast a commendable tolling track record, ranging from 8 to 14 years, while the annuity projects have consistently received 26 and 20 semi-annual annuities without any significant deductions, according to a recent Crisil report.

By investing in this highway asset, KKR-backed Highways Infra aims to capitalize on the steady revenue streams generated through toll collection and annuities over the concession period. The long-term tolling track record and consistent annuity payments make the project an attractive investment opportunity for the global fund.

The potential acquisition of the Lalitpur-Lakhnadon highway asset signifies KKR’s commitment to participating in India’s infrastructure growth story. The development also reaffirms the growing confidence of global investors in the country’s infrastructure sector, which has witnessed significant policy reforms and conducive regulatory measures in recent years.

The successful bid by KKR-backed Highways Infra in the ToT 12 auction is expected to be a notable addition to the fund’s existing infrastructure portfolio in India. It also reflects the confidence placed by the global fund in the long-term potential of India’s road infrastructure sector, which is witnessing increased government spending and private sector participation.

As the infrastructure landscape in India continues to evolve and expand, the acquisition of strategic road assets under the ToT model presents lucrative investment opportunities for global funds like KKR. Furthermore, the infusion of private capital through such auctions is instrumental in accelerating the development of critical transportation corridors and improving overall connectivity across the country.

The finalization of the ToT 12 auction results and the successful acquisition of the Lalitpur-Lakhnadon highway asset will undoubtedly contribute to India’s infrastructure growth trajectory and further solidify KKR’s position as a key investor in the country’s infrastructure development journey.

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