14 April 2024

Ferrovial Considers Investing Up to €4 Billion in New Concessions in India

2 min read

Ferrovial is contemplating an investment of up to €4 billion across various transportation concessions in India. The company, which specializes in the transport infrastructure and mobility sector, currently holds 24% of the Indian concession fund IRB and owns 25% of the company that controls it. During a conference with analysts, the CEO of Cintra, its highway subsidiary, Andrés Sacristán, explained that the firm aims to leverage the growth opportunities in India, which currently has the world’s largest portfolio of highway projects worth €23 billion.

Thus, India is expected to be the fastest-growing economy in the coming years, with an average annual growth rate of 6.3%, moving from the fifth to the third largest economy in the world by 2028 or even 2027. With a population of 1.4 billion people, the middle class is set to expand to 600 million individuals by 2045, resulting in a sixfold increase in vehicle ownership by 2040 and entailing investments of €217 billion in transport infrastructure.

Growth in IRB
Ferrovial entered the capital of IRB Infrastructure Developers in December 2021, acquiring a 25% stake for €369 million. This Indian company has 15 concessions in its portfolio covering 10,567 kilometers of lanes, three of which are currently under construction, with contracts signed with 21 years of validity remaining. Since that investment, IRB’s stock has risen from 21.12 to 50.95 rupees, representing a 141% appreciation. Ferrovial has just completed the acquisition of 24% of IRB Infrastructure Trust, which is in turn 51% controlled by IRB Infrastructure Developers.

“This acquisition provides us with a good balance between risk and reward, with the ability to immediately create value. We are now better positioned to capture growth from a significant project portfolio in the Indian market,” argued Sacristán. For now, the executive has ruled out further acquisition operations in India: “This is the level of investment we are comfortable with, and the additional contribution of funds will depend on several factors, such as the speed or size of the projects.”