BackGMR Enterprises in talks to raise around Rs300 crore
Russia's VTB Capital may fund almost half the amount in GMR's structured debt deal
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GMR Enterprises Pvt. Ltd, the holding company of Hyderabad-based infrastructure conglomerate GMR Group, is in talks to raise around Rs300 crore in structured debt to refinance some existing debt, two people aware of the development said.
GMR Enterprises and the promoters own a 60.1% stake in the listed firm, GMR Infrastructure Ltd, stock exchange data show.
The GMR Group has three airports in operation, 10 power generation plants with a gross operational capacity of about 4,600 megawatts and eight road projects covering over 600km. GMR Infrastructure is developing two special investment regions. The group also owns the Delhi franchise of the Indian Premier League.
Russian investment banking firm VTB Capital Group is one of the parties that the infrastructure group is in talks with, said one of the two people cited earlier, both of whom spoke on condition of anonymity.
“They (GMR Enterprises) are in talks to raise structured debt to the tune of almost Rs300 crore. The plan is to use the funds to refinance part of the existing debt obligations of the holding company as well as to refinance some debt of subsidiary companies," this person said.
VTB Capital is looking to fund almost half of the Rs300 crore that GMR Enterprises is looking to raise, said the second of the two people. “VTB Capital will be investing around Rs120-150 crore as part of the first tranche of this round, while the rest maybe raised from other investors," he said.
GMR Enterprises is raising the structured debt through debentures with a coupon rate of around 8%, having a tenure of three and a half years, he said, adding, “The holding company has long-term debt of around Rs3,100 crore, close to 10% of which is payable in the short term."
Long-term debt providers to the company include US private equity firm KKR, Piramal Enterprises Ltd and First Gulf Bank, the company’s financial statements filed with the Registrar of Companies (RoC) show.
In 2014, GMR Group’s holding company had raised Rs1,000 crore in structured long-term debt from KKR and other co-investors, according to a statement on the group’s website.
“During the course of normal business, the Group is pursuing variety of activities including fund raising, refinancing and others. In view of such transactions, Group will be engaging with many parties. We are not in a position to comment on any specific transaction," a GMR Infra spokesperson said in an emailed response.
“We do not comment on client information," a spokesperson for VTB Capital said.
The latest round of fund-raising at GMR is part of the ongoing process at the group to deleverage its balance sheet.
In May, GMR announced that Malaysia’s largest electricity utility, Tenaga Nasional Bhd, was buying a 30% stake in a “select portfolio" of GMR Energy Ltd’s assets for $300 million (around Rs2,000 crore). The transaction was closed earlier this month.
The proceeds from the stake sale will be exclusively used to reduce the company’s debt.
GMR Energy’s corporate debt will be lowered by Rs2,000 crore to Rs750 crore, GMR Infrastructure’s management said in May. The deal will help GMR save Rs200-250 crore per year in interest costs.
As of 31 March, GMR Infrastructure had total consolidated debt of Rs37,413.35 crore.
Last month, Delhi International Airport Ltd, a subsidiary of GMR Airports and GMR Infrastructure, raised $522.6 million from international investors through a bond issue. The group has also been reported to be in talks to sell a stake in the Hyderabad airport.
In September, Business Standard reported that Apollo Global Management had emerged as the front runner to buy a 30% stake in GMR Hyderabad International Airport Pvt. Ltd for Rs2,000 crore.
Other bidders included Canadian pension asset manager PSP Investments; Flughafen Zürich, which operates the Zurich airport; and IDFC Alternatives, the private equity firm of IDFC. Also, last month, Mint reported that GMR Group had initiated discussions with SembCorp Industries Ltd of Singapore and US-based Lone Star Funds for the sale of a significant stake in GMR Chhattisgarh Energy Ltd, a wholly owned subsidiary of GMR Energy.
The group has also revamped its corporate structure. As a part of the restructuring, the other promoter entities, GMR Holdings Pvt. Ltd and GMR Projects Pvt. Ltd, have been amalgamated into GMR Enterprises.
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