Walter is a new platform born out of an acquisition of six operating toll road projects based in strategic locations across India, including in the prominent North-South highway corridor. Actis has been an active investor in Indian infrastructure for many years and has experience in the toll roads sector. Actis’ Head of Long Life Infrastructure, Adrian Mucalov speaks to Walter’s Head Of Corporate Finance And Strategy, Gaurav Chaturvedi.
Adrian: Can you tell me about Walter and the broader toll road landscape in India?
Gaurav: Walter is a new platform born out of an acquisition of six operating toll road projects based in strategic locations across India, including in the prominent North-South highway corridor. Actis has been an active investor in Indian infrastructure for many years and has experience in the toll roads sector.
India’s toll road market is both attractive and an important driver of GDP growth in the country. They represent more than 3.6% of India’s GDP or about two- thirds of the entire transport- related contribution to GDP. The sector benefits from a supportive regulatory environment as the government has moved over time from a state-funded highways model to a public-private partnership. In particular, the road development model of hybrid annuity concession reduces the risk on operators since it pays a fixed sum, which is inflation adjusted, in return for road availability, with concessions running up to 15 years. This offers a good long-term opportunity for investors to maintain and operate India’s toll roads.
These assets, in common with other infrastructure, have been the backbone of India’s economic growth and will continue to be so as they help develop ecosystems and clusters of businesses. The focus has primarily been on developing national highways and expressways which constitute only about 2% of the length of all roads, but these national highways and expressways carry about 40% of the road traffic.
Adrian: What are Walter’s plans for expansion?
Gaurav: The strategy is to acquire operational assets with limited construction risk that both the private and state sectors have developed over the past 20 years which includes securing contracts for new operating concessions. The government has ambitious plans to develop infrastructure, with roads a particular focus – (it has committed to 25,000 kilometres of new roads in 2022-23, for example). Further out as the market develops and matures, we also see opportunities in acquiring assets from similar platforms to expand the business.
Adrian: How is Walter integrating sustainability?
Gaurav: We see substantial opportunities in improving the sustainability profile of the toll roads we operate.
The government sponsored introduction of Fastags reduces CO₂ emissions due to shorter wait times at toll plazas. We plan to move towards renewable sources for our own energy requirements, given the high solar irradiance present in much of India. We expect to convert the head and satellite office energy sources to renewables and we are looking at ensuring the highway energy requirements are powered by renewable sources.
Safety is an important focus in a country which ranks third in the world for number of road accidents according to the International Road Federation. We are working to remove blind spots where possible and alert users through additional safety measures. We run regular training programmes for staff engaged in both operations and maintenance roles to equip them with means to keep users and themselves safe at all times. Moving towards a more digital way of operating, maintaining and monitoring would considerably reduce carbon footprint. Greater safety not only is an investment in our staff but leads to increases in road usage in an example of the Actis mantra ‘Values Drive Value’.
Further, we want to have a positive social impact on local communities and so are seeking to implement safety campaigns for nearby villages, develop waste management programmes, offer wellness check-ups and access to clean water where necessary as well as potentially fund community centres or school repairs.
Adrian: How can Actis support the business?
Gaurav: As a global infrastructure investor with a socially and environmentally responsible investment philosophy, Actis can help us build something unique. We are looking forward to working together to implement global and cross-sector best practices and value drivers to the business to enable value accretion for all stakeholders.