GMR divests majority stake in road project for Rs 222 cr

GMR divests majority stake in road project for Rs 222 cr
Highlights

Taking its ‘Asset right and asset light strategy’ a step further, GMR Group, the infrastructure major founded by Grandhi Mallikarjuna Rao, had divested 74 per cent stake in Ulundurpet highway project in Tamil Nadu to IDFC’s India Infrastructure Fund (IIF) for a total consideration of Rs 222 crore.

This is the second major stake sale in GMR’s roads portfolio in less than six months

GMR Ulundurpet Expressways operates the highway stretch of about 73 km from Tindivanam to Ulundurpet on National Highway 45 in Tamil Nadu. The project had commenced commercial operations in July 2009

Hyderabad: Taking its ‘Asset right and asset light strategy’ a step further, GMR Group, the infrastructure major founded by Grandhi Mallikarjuna Rao, had divested 74 per cent stake in Ulundurpet highway project in Tamil Nadu to IDFC’s India Infrastructure Fund (IIF) for a total consideration of Rs 222 crore.

GMR Highways Ltd, a part of GMR Group, has signed a definitive agreement with IIF to sell 74 per cent stake in GMR Ulundurpet Expressways Private Limited (GUEL). “The transaction is subject to closing conditions customary to such transactions. IIF emerged as successful bidder in buying majority stake in GUEL, which attracted strong interest from several major investors from India and abroad,” GMR Group said in a release.

GUEL operates the highway stretch of about 73 km from Tindivanam to Ulundurpet on National Highway 45 in Tamil Nadu. The project had commenced commercial operations in July 2009.

“This transaction signifies GMR Group’s ability to successfully implement its Asset-Light-Asset-Right strategy under challenging market conditions. We continue to focus on creating liquidity and reducing our leveraged position, as part of the strategy of churning of assets. Divestment of this asset will also reduce the debt as on August 31, 2013, by about Rs 459 crore on a fully consolidated basis, in addition to infusing equity funds of Rs 222 crore,” said Madhu Terdal, Group CFO, GMR Group.

The GMR Group will continue to focus in adopting this approach in other Businesses as well. This partnership will also strengthen the relationship with IDFC, he added.

This is a second major divestment in GMR’s roads portfolio in less than six months. Prior to this, the company had sold 74 per cent stake in GMR Jadcherla Expressways to SBI Infrastructure Investments and SBI Macquarie Infrastructure Trust for a total consideration of Rs 206 crore. GMR, which builds and operates airports, power projects and roads, is looking at raising Rs 1,800 crore by selling stake in four highway projects.

“This investment is our first major acquisition and a step in the direction of implementing our road sector strategy of acquiring control of operational projects with proven traffic history. Given the uncertainty and delays in implementing under construction projects, we will continue our focus on acquisition of operating road assets,” said M K Sinha, Managing Partner and CEO, IDFC Alternatives

This investment also reinforces our desire to stick to partners with whom IDFC has proven and long standing relationships like the GMR Group and we look forward to continue working with GMR in building and operating quality infrastructure assets in India, he added.

IIF, which is one of the largest infrastructure focused funds, has a well-diversified portfolio with existing investments in roads, ports, conventional and cleantech energy assets. IIF has investments in several infrastructure entities that operate over 1,878 lane km of roads in India and this investment is expected to further expand its existing roads portfolio.

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