IDFC Project Equity has invested $50 million in two special purpose vehicles (SPVs) floated by Nashik-based Ashoka Buildcon Ltd, reports Mint. The infrastructure development company has sold a 49% stake in two road projects. The funds have been invested from India Infrastructure Fund (IIF), which has been jointly promoted by IDFC, Citigroup Inc and India Infrastructure Finance Co Ltd (IIFCL), and managed by IDFC Project Equity.
The IIF investment is in two stretches of toll roads between Nagpur in Maharashtra and Raipur in Chhattisgarh, totalling 162 km in length. Last month IDFC Project Equity, which manages IIF, invested Rs 350 crore in Essar Power Ltd for part financing the equity for its ongoing expansion projects. It has also invested another $70 million in four other road projects.
Interestingly, IDFC Private Equity, a sister concern of IDFC Project Equity, has also invested in Ashoka Buildcon. The private equity arm reportedly invested a whopping Rs 700 crore, in probably its largest investment, in the company for a 15.62% stake in a pre-IPO deal in February last year.
IIF is looking to exit its investments through a listing, which look tough in the current global environment. Many listed infrastructure funds have been trading at discount to their NAVs. Project equity funds depend on cash flows, paid as dividends, for regular income on
The fund is also looking at options where it can transfer its holding in a project to a group level. IIF is also looking at options like put options (selling back to promoters at decided price) and tag-along rights (selling stake with the promoters).
IIF plans to invest 60% of its corpus in power and road projects. It has managed to raise $875 million and is aiming a close of $1-1.25 billion. The fund plans to invest rest of the corpus in ports,
airports, telecom infrastructure and power and gas distribution and transmission projects. IDFC Project Equity was recently reported to be picking up nearly a 17% stake in Gujarat-based city gas distribution firm Sabarmati Gas.