Mumbai (Maharashtra): IRB Infrastructure Developers has signed binding definitive agreements with Singapore's sovereign wealth fund GIC for a total investment of up to Rs 4,400 crore, including the funding of future construction costs.
As part of the transaction, IRB will transfer nine of its build-operate-transfer (BOT) road assets into a private infrastructure investment trust in which IRB will hold a controlling stake of 51 per cent.
The portfolio spans across 1,200 km in Haryana, Uttar Pradesh, Rajasthan, Gujarat, Maharashtra and Karnataka. Three of these projects have recently become operational and balance six are under various stages of construction.
Five of the assets under construction are four to six laning projects where tolling as well as construction has already begun. These projects are strategically located along economic corridors and across tourist hubs, IRB said in a statement.
The investment proceeds from GIC will be used for deleveraging of the portfolio and equity funding for under-construction projects. IRB will have management control over these assets with GIC having customary rights of a financial investor and corresponding board representation.
The balance construction, operation and maintenance for the portfolio will be executed by IRB as project manager for the private investment trust.
The net revenue of portfolio in FY 2019 was Rs 630 crore. At the completion of construction, the enterprise value of portfolio will be Rs 22,500 crore.
With this transaction, the portfolio will be significantly deleveraged and IRB will get material equity support for construction completion, enhancing its project execution capabilities and increasing visibility for its EPC and O&M order book.
"This investment symbolises the confidence shown by a global institutional investor in IRB's ability to build quality infrastructure for India," said Chairman and Managing Director Virendra Mhaiskar.
"We are delighted to have GIC as our long-term investor in this growth story. IRB and GIC plan to also explore future road sector opportunities in India together through the private infrastructure investment trust, exhibiting IRB's strength and domain expertise as a market leader in Indian roads and highways sector," he said.
Bajaj Consultants acted as the exclusive financial advisor to IRB for the transaction. S&R Associates acted as legal advisor to IRB and Nishith Desai Associates acted as legal advisor to GIC.
IRB Infrastructure Developers is one of the largest private roads and highways infrastructure developers in India having a strong track record of constructing over 12,600 lane km in two decades. It has executed projects pan-India with an ability to construct over 500 km in a year.
IRB has 20 per cent share in India's prestigious Golden Quadrilateral project, which is the largest by any private infrastructure developer in India. The company's order book on June 30 stood at Rs 12,650 crore.