Exclusive CVC, China’s Road King Plan stake sold to $3 billion toll business formula

A worker adjusts a temporary electric cable on a nearly complete section of a toll road near the port in north Jakarta, Indonesia, on December 15, 2015. REUTERS/Garry Lotulung/File Photo

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SINGAPORE, Sept 21 (Reuters) – CVC Capital Partners has decided to sell a 25% stake in the toll road arm of China’s Road King Infrastructure Ltd ( 1098.HK ) as part of a deal that targets a unit price of up to $3. Billion, two sources with direct knowledge about this.

The Europe-based private equity firm’s exit from Road King Expressway International Holdings (RKE) will come alongside a partial sale of a 75% stake in China, they said.

RKE operates five expressways in China and three in Indonesia.

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Its $3 billion valuation depends in part on the purchase of another toll road asset in the Southeast Asian country that it is close to finalizing, sources told Reuters.

A source said the asset purchase could be worth at least $500 million.

The potential purchase of new assets and a $3 billion valuation of the toll road business were not previously reported.

CVC declined to comment. Representatives for Road King did not respond to requests for comment.

The sources declined to be identified because they are not authorized to speak to the media.

CVC and Road King’s efforts to monetize the toll road business come at a time when global investor interest in infrastructure assets is growing, driven by sovereign, pension and private equity funds chasing long-term returns.

The two are hoping that potential bidders will be attracted to a business that has strong visibility into cash flow and cash distributions and is backed by a long remaining grace period, one of the sources said.

“Both of these markets have huge shortages around toll assets 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 been operating expressways in the country for nearly three decades.

It diversified into the Indonesian toll road business in 2019, and its expressways in China and Indonesia span a total of more than 600 kilometers, according to the company’s website.

CVC bought a 25% stake in RKE in August 2018 for about $255 million.

Sources said Canadian funds including Dutch pension funds APG and CDPQ could be among suitors for the Indonesian assets.

One of them highlighted other investors including Korean and Japanese conglomerates and US-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 negotiations with bidders went.

The source said that although the parent was keen to retain a controlling stake in RKE, it was keeping options open for a major stake sale.

($1 = 7.8494 Hong Kong dollars)

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Reporting by Anshuman Earth and Beyond; Edited by Muralikumar Anantharaman

Our standards: Thomson Reuters Trust Policy.

The article is in Bengali

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