IDFC Alternatives, the private equity arm of infrastructure lender IDFC Ltd, has acquired a majority stake in two road assets from IPO-bound GR Infraprojects Ltd for an undisclosed amount.
The PE firm, through its India Infrastructure Fund II, bought the stake in Jodhpur Pali Expressway Ltd (JPEL) and Shillong Expressway Ltd (SEL) from the Delhi-based company. It will eventually increase its stake to 100% after completion of certain closing requirements, according to a statement.
Jodhpur Pali Expressway is an operational build–operate–transfer toll asset in Rajasthan awarded by the state government with a concession period of 25 years. Shillong Expressway is an operational BOT annuity-based project in Meghalaya awarded by the National Highways Authority of India.
Vinod Agarwal, managing director at GR Infraprojects, said the asset sale is part of the company’s strategy to focus on its engineering, procurement and construction business.
India Infrastructure Fund II is a $900 million PE fund that provides growth-stage capital to companies in India. Late last year, the fund acquired BSCPL Godhra Tollways Ltd and three solar projects in Punjab and Rajasthan from engineering and construction company Punj Lloyd Ltd.
Equirus Capital acted as the exclusive transaction adviser to GR Infraprojects.
The company was set up by GR Infraprojects in January 2013 as a special purpose vehicle to widen the two-lane highway from Jodhpur to Pali in Rajasthan.
According to an August 2016 report by ratings firm CARE, the project cost was Rs 423 crore. Till 31 March 2016, JPEL had spent Rs 414 crore on the project, funded through a term loan of Rs 291 crore and balance Rs 123 core through equity and unsecured loan from GR Infraprojects.
JPEL reported a net loss of Rs 5.42 crore on toll collection income of Rs 37.30 crore in 2015-16, compared with a net loss of Rs 4.16 crore on toll collection income of Rs 13.68 crore the year before.
SEL was set up in 2010 to build and maintain Shillong bypass in Meghalaya. The project was completed in March 2013 at a cost of Rs 250 crore, said another August 2016 CARE report.
During 2015-16, SEL registered a net profit of Rs 2.90 crore on total operating income of Rs 50.88 crore, compared with a net profit of Rs 4.37 crore on total operating income of Rs 51.28 crore the year before.
In October last year, GR Infraprojects filed its draft red herring prospectus to float its maiden public issue. The proposed initial public offering comprises a fresh issue to raise Rs 240 crore ($36 million), in addition to an offer for sale by a private equity investor and the founder group.
In March 2011, the company raised Rs 80 crore from Motilal Oswal PE and IDFC Alternatives. Motilal Oswal PE, which led the round, holds a 9.9% stake and is looking to sell most of its stake in the IPO. IDFC Alternatives exited the firm, which was set up in 1995, in 2015.
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