State Bank of India’s investment banking arm SBI Capital Markets and Piramal Enterprises (PEL) have signed a Memorandum of Understanding (MoU) to co-operate on opportunities in acquiring controlling stakes in road Public-Private-Partnership (PPP) assets where many developers are looking at hiving off their completed or near completion assets to repair their balance sheets.
SBI Capital will give first preference to PEL on all the road asset projects it advises. “SBI Capital will provide a first-preferred look to Piramal,” said Parvez Umrigar, co-head – structured investment group, Piramal Enterprises.
The investment bank would also assist PEL in obtaining necessary approvals for closing such transactions.
The MoU is currently restricted to road assets where Piramal is looking to buyout commissioned or soon-to-be commissioned road projects.
“We have already been in the mezzanine financing space; we saw opportunity in buyout of road assets,” said Umrigar.
“In the past two years, at least 70-80 per cent of closures in infrastructure projects have been led by SBI Capital Markets,” he said.
This makes a strong partnership for PEL which has been looking to scale up its exposure to infrastructure projects.
“SBI Capital is the largest investment banker having strong relationships with infrastructure developers and enjoying highest level of confidence within the banking industry. Piramal considers road sector as an important area of investment and we believe that our partnership with SBI Capital is a step towards achieving this objective,” said Umrigar.
PEL and SBI Capital are already working on certain projects and term sheets have been signed with some of the listed players in the road space.
In an unrelated development, last month, Piramal Enterprises’ financial services arm Piramal Capital combined its real estate private equity fund management business known as Indiareit and its real estate and allied sectors’ focused NBFC into an integrated vertical, targeting funding opportunities within real estate and allied sectors. The infrastructure focused investment unit remains separate from this division for the cash rich diversified firm.
(Edited by Joby Puthuparampil Johnson)