ICICI Venture Funds Management Co. Ltd, the private equity arm of ICICI Bank Ltd, India’s second biggest lender, is planning to invest about $800 million (Rs3,148 crore) to pick up a stake in Jaypee Infratech Ltd, a unit of the cement-to-construction conglomerate Jaypee Group, said a person familiar with the matter.
Mint couldn’t ascertain the size of the proposed stake. Jaiprakash Associates and ICICI Venture declined to comment.
Jaypee Infratech is a fully-owned unit of the Jaypee Group and was floated to implement the Taj Expressway project, a 165km highway connecting the cities of Noida and Agra in Uttar Pradesh along the banks of the Yamuna river. The company has also got the right to develop 25 million sq. m of land along the expressway, according to annual report of group company Jaiprakash Associates Ltd, which won the rights to build the road. The rights will be transferred to Jaypee Infra-tech, the report said.
CORE INVESTMENT (Graphic)
Private participation in highway construction, operation and maintenance is taking off in India with the Union and state governments’ emphasis on road-building programmes. The National Highways Authority of India, the country’s apex highway regulator, alone has awarded 54 projects totalling some 3,200km to private companies at a total project cost of some Rs20,842 crore. This is apart from individual deals such as the Taj Expressway project pushed by state governments.
The Taj Expressway project, which was awarded to the company in 2003 by the previous government headed by Mayawati, also the current chief minister of Uttar Pradesh, was a subject of political controversy when the next government levelled corruption charges against her.
This stalled the project for three years until an inquiry commission cleared the project last year.
It’s now expected to be completed by 2010.
Analysts estimate the cost of the highway project have more than doubled to Rs6,000 crore now. It is not known how much the Jaypee Group is investing on other projects along the stretch of land it plans to develop.
ICICI Venture has invested in about10 real estate firms across funds. The company plans to raise $7.5 billion over three years to invest in sectors such as real estate and in short-term funds, apart from its core private equity business. By the end of 2010, the firm expects to have over $10 billion in capital under management, a fourfold growth over the existing $2.5 billion.
(Rahul Chandran contributed to this story.)