Vinci Highways, the French company that had exited India about eight years ago, now plans to enter the country again by acquiring a 90-kilometre-long road project.
The company is in discussions to acquire Vindhyachal Expressway (VEPL), which is four-laning the section between Rewa in Madhya Pradesh and Varanasi in Uttar Pradesh on NH-7, said two people aware of the development. New York-based Global Infrastructure Partners (GIP) is also in talks to acquire VEPL, said the people.
VEPL is likely to fetch INR 2,000 crore in enterprise value, they said. VEPL is sponsored by JMC Projects, a 67.75% subsidiary of Kalpataru Power Transmission.
Its concession agreement with Madhya Pradesh Road Development Corporation on a design, build, finance, operate and transfer basis was executed on January 25, 2012 for 30 years. In February, JMC Projects merged with its parent company.
Emails seeking comment sent to Kalpataru Power Transmission, GIP as well as Vinci did not elicit any response till press time on Sunday.
The highway section operated by VEPL witnesses considerable traffic movement, originating and destined in the surrounding regions of MP and UP. However, according to a recent Care Ratings report, around 79% of the traffic on the toll road during FY22 consisted of commercial vehicles, which increased susceptibility of revenue to slowdown in economic downturn.
The actual traffic on the stretch was also much lower than envisaged and VEPL would require significant support from the parent going forward, the ratings firm said. However, VEPL has a long tail period of around 15 years which provides cushion to an extent, it noted.
In 2015, Vinci wound down its operations in India. According to a Times of India report at the time, a key reason for the pullout was the government decision to award road contracts on an EPC basis or on cash contracts rather than public-private partnership.
The new policy did not fit into Vinci’s plans. Vinci Highways designs, finances, builds and operates motorways, bridges, tunnels, urban roads and mobility services in 15 countries, according to the company website.
GIP had also exited the India road business in 2021 by selling its entire interest in Highway Concessions One and seven highway assets with a total length of 487 kms to KKR & Co.
Road execution activity in fiscal 2024 is expected to increase 16-21% to 12,000-12,500 km, in the backdrop of a healthy pipeline of projects, increased capital outlay by the government and focus on project completions ahead of the general elections, said a recent ICRA report.
