Infrastructure company Essel Infraprojects has announced it has agreed to acquire two road assets in India from Patel Engineering and KNR Constructions.

Patel Engineering and KNR Constructions will sell their entire equity stake in both projects, namely Patel KNR Infrastructure Ltd (PKIL) and Patel KNR Heavy Infrastructure Ltd (PKHIL) to the Essel group for a total amount of INR8.5 billion (US$124 million).

Patel Engineering holds about 60% stake in each of the two assets and KNR the remaining 40%.

Investment bank Equirus Capital acted as transaction advisors to KNR Constructions and Patel Engineering. Cyril Amarchand Mangaldas acted as the legal advisors to the two sellers while Luthra & Luthra Law Offices advised Essel on this transaction.

Both the assets are operational on the annuity-based model and were awarded by the national Highways Authority of India (NHAI). 

The deal is expected to close in the first quarter of 2017.

KNR Constructions plans to focus on its EPC (engineering, procurement and construction) business by exiting the asset-heavy BOT business, while the sale will help Patel Engineering improve its financial liquidity.

Essel Infraprojects’ roads subsidiary Essel Highways, which was set up in 2007, has assets valued at about US$1.8 billion. The company has expanded its portfolio acquiring several road projects and currently it has 14 road projects totalling 4,500km, of which 10 are operational. 

In August, Essel Highways secured US$85 million loan from Goldman Sachs as part of a US$220 million debenture issuance to finance new projects and for strategic acquisitions.