Infrastructure firm Welspun Enterprises Ltd said on Wednesday it has sold a 37 per cent stake in a road project to India Infrastructure Fund-II, an alternate fund sponsored by IDFC Alternatives, at an enterprise value of Rs 662 crore (about $100 million).
The deal for the Dewas-Bhopal corridor project includes a debt of 317 crore ($48 million) and a contingent deferred consideration of Rs 34 crore ($4.5 million), Welspun said in a stock market disclosure.
Following the deal, Welspun’s stake in Dewas-Bhopal Corridor Pvt Ltd will fall to 13 per cent. Chetak Enterprises Ltd, a highways developer, owns the balance 50 per cent of the company that operates the 142.6 km project in Madhya Pradesh.
Welspun said it can transfer its remaining stake to the IDFC fund within two years, subject to the approval of the Madhya Pradesh Road Development Corp.
The company said the transaction strengthens its financial capabilities by increasing the cash and reducing net debt by nearly Rs 282 crore.
The four-lane project was completed in 2010 for Rs 630 crore. It is one of the largest of the six build, operate and transfer projects in Welpsun’s portfolio.
Shares of Welspun Enterprises jumped after the announcement. The shares were trading up 8.7 per cent at Rs 56.25 in afternoon trade on the Bombay Stock Exchange where the benchmark Sensex was about 1 per cent higher.
EY acted as the advisor to DBCL for the deal.
In November last year, Welspun group merged Welspun Enterprises and three private firms -- Welspun Infratech Ltd, Welspun Plastics Pvt Ltd and Welspun Infra Projects Pvt Ltd -- with listed firm Welspun Projects Ltd, to simplify the corporate structure and leverage the strength of a combined balance sheet. Welspun Projects was subsequently renamed Welspun Enterprises.