The year is ending with big deals. Welspun Infra Projects Pvt Ltd, a closely held entity of the textile-to-gas pipes-maker Welspun group, on Friday said it would acquire 35% stake in Leighton Contractors India Pvt Ltd, the Indian arm of Australia’s Leighton International, for Rs 470 crore ($100 million).
The new company, which will be called Leighton Welspun, will pursue infrastructure opportunities in India as well as neighbouring countries like Sri Lanka. The joint venture plans to bid for projects in road, railways, power, ports which will be developed on a build, operate and transfer (BOT) basis.
Welspun Infra is yet to win an infrastructure development contract, however, Leighton, which has a presence in Malaysia, India, Singapore, Sri Lanka and Brunei, has built an offshore refinery for oil marketing company Hindustan Petroleum Co. Ltd at Visakhapatnam, Andhra Pradesh; and the Indore-Khalghat Highway road under the North-South corridor for National Highway Authority of India (NHAI). It also constructed Motorola India Pvt. Ltd’s manufacturing facility at Sriperumbudur near Chennai.
“As Welspun continues to expand, we foresee great potential in the $500 billion Indian infrastructure sector and other neighbouring countries,” Welspun chairman B.K. Goenka said, and says the company has a pipeline of projects in various stages of bidding and finalisation.
It says the joint venture with Leighton Contractors, which specialises in engineering, procurement and construction (EPC), will add technical capabilities and expertise to its business. In the joint venture, Welspun will concentrate on project development and bidding while Leighton will be responsible for project management and EPC.
“A partner like Welspun, which has strong interest in developing infrastructure, complements Leighton’s extensive project development and delivery experience in India and internationally. India’s construction sector is forecast to grow at 10 per cent annually over the next three years, and more than $120 billion is set to be spent in 2011 alone. Our partnership with Welspun will allow us to bid very competitively for this upcoming infrastructure work,” said David Savage, Chief Operating Officer, Leighton Holdings.
“In India, at least $110 billion has been identified as investment necessary to improve road and rail infrastructure, with $30 billion targeted to be raised by the private sector. In the government’s current five year-plan, around 35% of the $500 billion targeted for infrastructure development spending is expected to be in the power sector, driven by the energy demand as India continues to industrialize and urbanise.
The transaction is subject to customary statutory, regulatory and other corporate approvals and is scheduled to be completed in the next 90 days.