GR Infraprojects Ltd Thursday said it sold majority stakes in two of its build, operate and transfer (BOT) road assets to multi-asset manager IDFC Alternatives’ India Infrastructure Fund II for an undisclosed amount.
In a deal valued at about Rs800 crore (including debt), privately-held GR Infraprojects has sold 74% stake in each of the two road assets to the IDFC fund, said a person familiar with the transaction on condition of anonymity. The fund will acquire the remaining 26% in the assets upon completion of certain closing requirements as per the terms and conditions of the agreement, the person said.
Mint had reported on 16 January that an infrastructure fund of IDFC Alternatives signed an agreement to buy two annuity-based BOT road assets from GR Infraprojects, looking to expand its portfolio of operational assets in India.
The two annuity-based BOT assets under special purpose vehicles Jodhpur Pali Expressway Ltd in Rajasthan and Shillong Expressway Ltd in Meghalaya. The Jodhpur Pali project was awarded by the Rajasthan government with a concession period of 25 years, while the Shillong Expressway project was awarded by the National Highways Authority of India (NHAI).
Investment bank Equirus Capital Pvt. Ltd acted as the exclusive transaction adviser to GR Infraprojects.
“The transaction re-enforces the trend in road sector of divesting operational assets to institutions who are looking to build a portfolio of yield generating assets and thereby freeing up the capital for companies for reinvestment in new assets and strengthen focus on core EPC business,” said Ajay Garg, managing director, Equirus Capital.
Set up in 1995, Udaipur-based infrastructure and engineering, procurement and construction (EPC) firm GR Infraprojects has about 1,887 lane km of projects awarded by NHAI under development, according to the firm’s website. It had been looking to divest its three BOT assets to focus on its core EPC business.
In EPC, the government pays the contractor to build the project while in BOT projects, a private operator builds an infrastructure project from its own funds, operates it for the period of the concession and then transfers it to the government. GR Infraprojects had filed for an initial public offering in September 2016 and received the capital markets regulator Securities and Exchange Board of India’s approval in December.
IDFC Alternatives, whose parent firm IDFC Ltd is an infrastructure-focused lender, is an active investor in Indian infrastructure along with others such as US-based I Squared Capital and Australia’s Macquarie Group.