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Business News/ Companies / News/  MBL Infrastructures seeks Rs300 crore mezzanine funding
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MBL Infrastructures seeks Rs300 crore mezzanine funding

MBL Infrastructures is said to be in talks with lenders including Piramal Fund Management to raise the mezzanine funding

MBL is executing three projects on a build-operate-transfer (BOT) basis through special purpose vehicles.Premium
MBL is executing three projects on a build-operate-transfer (BOT) basis through special purpose vehicles.

Mumbai: New Delhi-based MBL Infrastructures Ltd is in talks to raise up to Rs300 crore in mezzanine funding to infuse additional equity into some of its newly acquired projects to attain financial closure, two people aware of the development said. Mezzanine financing is a non-conventional form of funding that shares the characteristics of both debt and equity.

“The company has been in talks with a several lenders for a while now and has already received a term sheet from Piramal Fund Management," one of the two people cited above said on condition of anonymity. “The promoters are looking to shore up equity to attain financial closure of the newly acquired projects."

MBL is executing three projects on a build-operate-transfer (BOT) basis through special purpose vehicles. The company also recently won three projects under the hybrid annuity model from the National Highways Authority of India (NHAI).

“The funds raised will be invested in a newly created subsidiary which will act as the holding company of MBL Infra’s SPVs of ongoing and newly acquired projects," said the second person, who also spoke on condition of anonymity.

Emails sent to MBL Infra and Piramal Fund Management had not elicited a response till the time of going to press.

Mint reported on 3 January that many developers who had recently won projects under the hybrid annuity model are finding it difficult to attain financial closure as banks remain cautious and selective on funding projects awarded under the model.

Of the 26 hybrid annuity projects awarded this fiscal year, about four or five may be scrapped due to the inability of the developer to invest equity or bring in debt, the report said.

Under this model, the government shares 40% of the project cost and allocates funds to the developer to start work. The remaining investment would come from the developer over the duration of the project’s execution. Revenue collection would be the responsibility of NHAI; developers will be paid in annual instalments over a specified period of time.

According to MBL Infra’s latest corporate filings, the company improved its revenue by more than 18% year-on-year to Rs2,314.35 crore in FY16. The company’s total debt stood at Rs724.47 crore. MBL has orders worth Rs7,665.77 crore, which it aims to execute in the next three to four years.

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Published: 05 Jan 2017, 12:09 AM IST
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