Construction and civil engineering major HCC Infrastructure Co. Ltd will dilute 14.5 per cent stake in HCC Concessions Ltd to US-based investment firm Xander Group for Rs 240 crore, according to a statement. HCC Infrastructure is a 100 per cent subsidiary of Hindustan Constructions Company Ltd, whose flagship projects include the Bandra-Worli Sea Link and Lavasa hill city.
The deal values HCC Concessions, which builds, finances and operates transport infrastructure, at $375 million or Rs 1650 crore. The share price of HCC Constructions closed at Rs 30.95 on the BSE, down 4.62 per cent on weak Q1 results.
This deal is the second known investment of the Xander Group in the Indian roads and highways space. Last year, it had invested Rs 400 crore in Sadbhav Infrastructure Project Ltd (an infra player primarily involved in roads and highways development), along with Norwest Venture Partners.
The Xander Group Inc. invests in infrastructure, hospitality, retail and real estate sectors, and has committed over $1.8 billion of equity in India across five dedicated India funds since 2005.
Currently, HCC Concessions portfolio includes six NHAI (National Highway Authority of India) concessions worth Rs 5,500 crore or $1.2 billion, of which one is an annuity project and five are toll roads.
“The Indian government has enhanced the pace of world-class infrastructure development through public private partnership (PPP) and HCC has chosen Xander, an investment group in which we find a wealth of expertise and commitment to complement our business goals. The deal reinforces faith in our robust asset portfolio and the growth potential of our concessions business,” said Ajit Gulabchand, chairman and managing director of HCC Infrastructure.
“As India continues to grow, it will need more world-class infrastructure, built by world-class companies. We are delighted to participate in the growth of its infrastructure business,” said Arthur Segel, chairman of the Xander Group.
The HCC Group is a leading engineering and construction firm, focused on urban infrastructure development. The company has executed many infrastructure projects and also constructed hydro-power and nuclear power generation capacities.
There have been a slew of big private equity deals in the Indian roads and highways space as investors look to tap the upcoming infra opportunities. India may require $1.7 trillion in the decade starting from 2010, to meet the country’s overall infrastructure demand and keep pace with the economic growth and urbanisation, a report by Goldman Sachs has stated. Of this, power and roads alone may require upwards of $700 billion.
Morgan Stanley Infrastructure Partners and Isolux Corsán Concesiones have announced an investment of $200 million each for developing highways in India under long-term concession agreements, awarded through the Build-Operate-Transfer (BOT) programme of NHAI.
Private equity major 3i Group has also invested $111.51 million in KMC Infratech Ltd, a subsidiary of KMC Constructions involved in BOT projects in the roads and highways Sector.
Other major investments in this space have been in Nandi Infrastructure Corridor Enterprises Ltd (JPMorgan and Goldman Sachs) and Tata Realty & Infrastructure (Actis).