Mumbai: Tata Realty and Infrastructure Ltd (TRIL) has emerged as the frontrunner to buy 18.4-km two-lane bypass in Durg, Chhattisgarh, from Nagpur-based infrastructure company SMS Ltd and IDFC Alternatives, two people familiar with the development said.

Durg Bypass is the first build-operate-transfer (BOT) project of the National Highways Authority of India (NHAI) for which a concession was awarded to SMS Shivnath Infrastructure, a special purpose vehicle (SPV) formed by SMS Ltd, in 1997 till 2031.

Mint first reported on Tata Realty’s interest in the project on 21 June.

Apart from Tata Realty, US-based infrastructure investment manager ISquared Capital is also in the race to acquire the project, the people cited above said on condition of anonymity.

SMS Ltd’s managing director Anand Sancheti confirmed the development. “We have agreed on a valuation of Rs270 crore for the project and are waiting for approval from NHAI for a revised substitution agreement for the deal to conclude.”

He added, “We, however, don’t anticipate any problem in getting the approval.”

An IDFC Alternatives spokesperson declined to comment on the matter. Tata Realty didn’t respond to a query fromMint as of press time.

IDFC Alternatives bought a 48.4% stake in the project in 2007 from its first infrastructure fund. SMS Infra owns the remaining 51.6% stake in the project. Construction of the project started in 1997 and the first phase was completed in 2000.

In BOT road projects, private developers were required to hold a minimum level of ownership throughout the concession period, usually 26%. NHAI notified a new exit policy for highway developers in January 2014 which allowed developers to fully exit a project.

“There has been an escalation in the project cost from what was originally envisaged following which an independent consultant was appointed to recalibrate the cost structure, which is being considered by NHAI,” Sancheti said.

Tata Realty has announced plans to invest up to Rs10,000 crore in infrastructure projects and also plans to launch an infrastructure investment trust (InvIT), as it seeks to increase its focus on public works.

Tata Realty, a unit of Tata group, is seeking to add to its infrastructure project portfolio over the next few years in light rail urban transport, airports, highways and roads, and ropeway projects. It plans to bid for projects mainly through the public-private partnership (PPP) route wherein it will build and maintain projects and collect tolls.