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Welspun buys 49% stake in road project from Vishvaraj Group

Construction firm Welspun Enterprises Ltd on Wednesday acquired a 49% stake in a road project of the National Highways Authority of India (NHAI) from Vishvaraj Group for Rs 8.33 crore ($1.31 million), the company said in a stock-exchange disclosure.

The company has an option to acquire the remaining 51% stake for Rs 8.67 crore after obtaining approval from NHAI.

The project involves four-laning of a 62.7 km stretch on National Highway-6 from Chikhali to Tarsod in Maharashtra. It is a hybrid-annuity project, which gets 40% financial support from the NHAI.

The bid project cost was Rs 1,048 crore.

The engineering, procurement and construction for this project will be executed by Welspun Enterprises.

Following this acquisition, Welspun Enterprises will become a sponsor of five hybrid-annuity projects with an aggregate worth of over Rs 5,000 crore, according to the release.

Welspun Group chairman B K Goenka said the company is focused on profitably growing its infrastructure portfolio and the current transaction is another step in that direction.

Goenka added that the company continues to explore opportunities for value creation in the infrastructure space.

In 2017, Welspun had acquired 49% stake each in two road projects of the NHAI from MBL Infrastructures Ltd for a total Rs 23 crore ($3.5 million).

Recent developments in road sector

Last month, a consortium led by Japan’s Mitsubishi Corporation agreed to buy 20% stake in Singapore-based investment firm Cube Highways and Infrastructure Pte. Ltd for an undisclosed amount.

Cube Highways is a joint venture between private equity firm I Squared Capital and World Bank’s private-sector investment arm International Finance Corp. It owns and operates more than 1,700 km of highways in India.

In September 2017, IL&FS Transportation Networks Ltd had agreed to divest a part of its stake in two road projects to Delhi-based Oriental Tollways Pvt Ltd.

In the same month, VCCircle reported Canadian firm Brookfield Asset Management had acquired two assets worth a total Rs 1,900 crore (close to $300 million).

The transaction involved road developers KMC Constructions Limited and BSCPL Infrastructure Ltd selling 100% stake in two build-operate-transfer toll roads: Simhapuri Expressway Ltd and Rayalseema Expressway Limited, respectively.

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