Lucknow-headquartered APCO Infratech is in talks with Alpha Alternatives to sell the strategic Z-Morh tunnel that provides all-weather connectivity between Gagangir and Sonamarg in Jammu and Kashmir (J&K) for $267 million, according to two people aware of the development.
The 6.5-km- tunnel, which ensures uninterrupted military logistics and year-round civilian access to Ladakh by bypassing an avalanche-prone stretch, was built at ₹2,400 crore and inaugurated in 2025. Awarded by the National Highways & Infrastructure Development Corp Ltd (NHIDCL), the project has a 15-year concession, with investments to be recovered through biannual annuity payments of ₹295 crore.
The deal will see Alpha Alternatives acquire APCO Amarnathji Tunnelway Pvt Ltd, the special purpose vehicle (SPV) set up by APCO Infratech to execute the Z-Morh tunnel project in Jammu and Kashmir.
“APCO is in talks with Alpha Alternatives for the sale of tunnel for an enterprise value of $267 million,” said the first of the two persons cited earlier, both of whom spoke on the condition of anonymity.
Queries emailed to APCO Infratech, Alpha Alternatives and NHIDCL remained unanswered till press time.
Alpha Alternatives, founded by Naresh Kothari, is a Mumbai-based alternative asset management firm that invests across non-traditional assets beyond plain equities and bonds.
The state-run NHIDCL awarded the project to the SPV in 2020 under the design-build-finance-operate-transfer (DBFOT) model, where a private entity handles the entire project lifecycle before transferring it back to the government. Since the developer does not face traffic risks under the annuity model, the buyer could expect to get assured and fixed cash flow from NHIDCL over a 15-year period, the second person said.
Under the sale agreement being finalised, the asset would be valued based on future cash flows guaranteed by the government. The sale price will essentially represent the current value of the remaining annuity payments, which are fixed, semi-annual instalments paid by the government.
Suprio Banerjee, vice-president & co-group head, Icra Ltd, said: “ assets have a history of toll collections and annuity receipts, which provides the investors the ability to assess future cash flows.” The regulatory support and standardization of concession agreements are driving the monetization of road assets in the country. The return metrics of these monetized assets have remained healthy over the years, he said.
“The monetization attractiveness is largely dependent on the cashflow visibility and its stability. While the geographic location of a highway asset influences traffic composition and operational characteristics, the monetization outcomes of national highway assets are largely insulated from state-specific considerations,” Banerjee added.
The proposed deal, which would transfer ownership of the concessionaire from APCO to Alpha Alternatives, requires NHIDCL’s consent, said the second person. If the deal happens, Alpha will assume the responsibility for the operation and maintenance (O&M) of the road for the remainder of the concession period.
The Z-Morh tunnel, located on the Srinagar- highway, is strategically important as it ensures seamless all-weather connectivity between Srinagar and Kargil and considerable reduction in travel time between Srinagar and Leh.
Situated at an altitude of over 8,650 ft, it ensures year-around connectivity between Srinagar and Sonamarg enroute to Leh, bypassing landslide and avalanche routes and ensuring safer and uninterrupted access to the strategically critical Ladakh region.
Highways and road infrastructure have emerged as key avenues in the government’s asset monetization programme, under which operational rights over already-built projects are transferred to private entities for a fixed period in exchange for guaranteed payments.
As of November 2025, the ministry of road transport and highways has cumulatively monetized ₹1.52 trillion worth of assets under various modes of asset monetization.
The government has identified a public-private partnership () project pipeline of 13,400 km, with an estimated cost of ₹8.3 trillion, to be developed during FY26-FY28.
The road ministry earlier this month informed the Lok Sabha that over 1,436 km of national highways have been built in Jammu and Kashmir since 2018. According to the data, the expenditure on highways has increased in both the Union territories from ₹2,932 crore in 2020–21 to ₹10,204 crore in 2024–25.
Merger and acquisition transactions in the infrastructure sector have also witnessed a growth. Data from EY showed that in 2025, transactions worth $24.6 billion were completed in the infrastructure space, growing from $18.2 billion in 2024.
On the investment outlook for the infrastructure sector, a recent EY report on mergers and acquisitions (M&As) said: “Looking ahead to 2026, the M&A infrastructure in India is expected to witness increased investments driven by government initiatives, enhanced regulatory support and a focus on technological integration. The emphasis on sustainability will further influence M&A strategies, leading to a rise in green infrastructure projects.”
It also noted that consolidation among smaller firms may occur as competition intensifies, resulting in a market with fewer but larger players. “Overall, the landscape is set for significant transformation, aligning with global trends and strategic growth opportunities,” it said.