I Squared Capital is understood to have sealed a deal to acquire Western UP Tollways for around R140 crore, a special purpose vehicle operating the Meerut-Muzaffarnagar highway project on National Highway 58, sources said. The project is jointly held by Hyderabad-based NCC and Gayatri Projects.
According to sources, I Squared has got a sweet deal, as the project seems to have been transacted below book, offering a higher internal rate of return for I Squared, which could be north of 14%, a source said. The equity invested in the project was in the range of R150-160 crore, he said.
Sources familiar with the project said that the traffic has taken a beating and the project was also delayed leading to cost overruns in it. According to a July 2015 report of CARE Ratings, the project saw cost escalation of close to Rs 220 crore to Rs 754.55 crore against the original project cost of Rs 535 crore. However, there have been some signs of improvement in the last one year. In FY15, Western UP Tollway garnered a total income of Rs 107.88 crore, up over 7%, while it narrowed its net loss to Rs 11.34 crore from Rs 21.68 crore in FY14, the CARE report said.