PremiumThe company said Virendra Mhaiskar, the founder promoter of IRB, will continue as the promoter and single largest shareholder post completion of the transactions with an approximate 34% stake and will retain management control of IRB
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MUMBAI : Ferrovial will invest up to ₹3,180 cr for a 24.9% stake in IRB Infras, while GIC will invest up to ₹2,167 cr for a 16.9% stake
IRB Infrastructure Developers Ltd on Tuesday said it would raise as much as ₹5,347 crore from Spanish infrastructure group Ferrovial SA and Singapore’s sovereign wealth fund GIC, in the largest equity fundraising by an Indian roads developer.
Ferrovial’s subsidiary Cintra Global SE will invest up to ₹3,180 crore for a 24.9% stake in IRB Infrastructure, while GIC will invest up to ₹2,167 crore for a 16.9% stake.
The Indian firm will sell the shares at ₹211.79 each to investors, a 28% discount to Tuesday’s closing price of ₹294.4. IRB’s shares surged 5.88% on BSE.
Virendra Mhaiskar, the founder of IRB, will continue as promoter and largest investor after completing the transactions, with approximately 34% stake and will retain management control of IRB, the company said in a statement.
While the pricing of preferential allotment—which is based on the market regulator’s pricing formula for such issuances—is at a significant discount to the current market price, Mhaiskar said he doesn’t see a challenge in getting shareholder approval for the transaction. “If you look at the past six months’ average pricing, this is almost at a 36% premium to that price," Mhaiskar said over the phone.
The fundraising will help it pare debt and participate in the government’s massive infrastructure development and monetization plan, IRB said.
The two transactions are subject to execution of definitive documents, approval of IRB shareholders, and approvals from lenders and regulators. The company will use ₹3,250 crore to reduce debt, while ₹1,497 crore will go towards current projects and new opportunities, and ₹600 crore will be used for general corporate purposes.
“There will be significant savings on interest cost due to this fundraising, and we will have around ₹1,500 crore of growth capital, which will give us the ability to bid for another ₹20,000 crore worth of projects in the next 2-4 years. This transaction addresses the twin objectives of reducing leverage and making available growth capital," said Mhaiskar.
He said the company will keep a close watch on the government’s asset monetization plan, wherein it will look at taking up BOT (build-operate-transfer) and TOT (toll-operate-transfer) projects. The listed parent firm owns seven road projects, while another seven projects are held under its public InvIT, and another nine projects are held under its private InvIT with GIC.
Mhaiskar said IRB decided to bring in a large strategic investor to gain more technical know-how, construction technology and best practices, especially on the ESG front.
“If you look at the visibility of new projects, we see much larger projects being taken up by the government, and the plans look to be very promising. So, we didn’t want to bring in only financial investors. Financial investors are important, and we have one of the best names already associated with IRB, which is the sovereign wealth fund of Singapore," added Mhaiskar.
Cintra will have the rights to appoint two directors on the company’s board.
Andres Sacristan, chief executive of Cintra, said: “This investment in IRB Infrastructure Developers represents a great opportunity for Cintra to expand into a new market for us—India—that has very promising fundamentals for toll road development. Our global experience as an investor and operator would optimize IRB’s operational capacity and ESG compliance, a field in which Cintra and Ferrovial are international leaders.
