CVC, China's Road King plan stake selldown in $3 bln toll business-sources

Road King Infrastructure

21/09/2022 09:59

By Anshuman Daga and Yantoultra Ngui
    SINGAPORE, Sept 21 (Reuters) - CVC Capital Partners has
decided to sell its 25% stake in the toll road arm of China's
Road King Infrastructure Ltd  1098.HK  as part of a deal that
aims to value the unit at up to $3 billion, two sources with
direct knowledge of the matter said.
    The Europe-based private equity firm's exit from Road King
Expressway International Holdings (RKE) will come alongside a
partial sale by the Chinese parent of its 75% stake, they said.
    RKE operates five expressways in China and three in
Indonesia.
    Its $3 billion valuation partly hinges on the purchase of
another toll road asset in the Southeast Asian nation that it is
close to finalising, the sources told Reuters.
    One of the sources said the asset purchase is likely to be
worth at least $500 million.
    The likely purchase of the new asset and the $3 billion
valuation of the toll road business has not been reported
previously.
    CVC declined to comment. Representatives from Road King did
not respond to requests for comment.
    The sources declined to be identified as they were not
authorised to speak to the media.
    CVC and Road King's attempts to monetise the toll road
business comes at a time of growing global investor interest for
infrastructure assets, driven by sovereign, pension and private
equity funds chasing long-term returns.
    The duo are hoping that potential bidders will be drawn to a
business that has strong visibility on cash flows and cash
distribution, and is supported by a long remaining concession
period, one of the sources said.
    "There's a lot of scarcity value around the toll assets in
both these markets and many pension and sovereign funds have
publicly said they are interested in Indonesian toll roads," the
source said.
    Road King, a Chinese property developer, has operated
expressways in the country since nearly three decades.
    It diversified into the Indonesian toll road business in
2019 and its expressways in China and Indonesia span over 600
kilometres in total, according to the company's website.
    CVC bought a 25% stake in RKE in August 2018 for about $255
million.
    The sources said Dutch pension fund APG and Canadian funds
including CDPQ are likely to be among the suitors for the
Indonesian assets.
    One of them highlighted Korean and Japanese conglomerates
and other investors including U.S.-based Global Infrastructure
Partners
    APG, CDPQ and GIP declined to comment.
    The first source said CVC and Road King were open to selling
the Indonesian and Chinese assets separately, subject to how the
discussions with bidders fared.
    The source said that though the parent was keen to retain a
controlling stake in RKE, it was keeping options open for a
bigger stake sale.
  ($1 = 7.8494 Hong Kong dollars)

 (Reporting by Anshuman Daga and Yantoultra Ngui; Editing by
Muralikumar Anantharaman)
 ((anshuman.daga@tr.com;))