Companies & Sectors
Highways: Investors eye acquisitions worth Rs24,500 crore
Investors are looking to pick up stake in projects worth Rs24,500 crore of completed highways, with an average of six years of operational history, estimates India Ratings and Research (Ind-Ra). Ind-Ra, based on publicly available information as well as further limited information received from issuers, notes that the list of sellers or potential sellers include companies like HCC Concessions Ltd, NCC Infrastructure Ltd, Soma Enterprises Ltd, Reliance Infrastructure Ltd and GMR Infrastructure Ltd.
 
The agency notes that there has been a paradigm shift in the acquisitions - from developers to financial investors. "We believe that this is a positive shift and it will give impetus and provide opportunities for the opening up of businesses in the operation and maintenance vertical," it said in a research note. 
 
The Indian highway sector is witnessing an enhanced level of activity in the acquisition space, largely led by global marque funds and investors namely, I Squared Capital, Brookfield Asset Management, PSP Investments and Macquarie's India Infrastructure Fund among others. These international funds have picked up stake or are in advanced stages of acquisition of around 2,900km length of national and state highway projects. Similarly, domestic financial investors namely, IDFC India Infrastructure Fund and other infrastructure companies such as, Tata Realty and Infrastructure Ltd have made a mark by showing interest in deals of around 780km length of highways. With Infrastructure Investment Trusts gaining traction, Ind-Ra says it believes highways, as an asset class will further evolve and will set benchmarks.
 
Road projects worth over Rs40,000 crore, spanning around 3,600km, have either been sold off in the last three years or are currently in the process of being divested. "This recent increase in investor appetite could well be sustained, with reports doing the rounds that the government is working towards clearing the roads to provide access for global sovereign wealth funds to invest into private highway projects," the ratings agency says.
 
The ratings agency believes that the National Highway Authority of India's (NHAI) 100% exit policy, which was cleared in mid-2015 and road developers bid to deleverage their balance sheet have both aided the momentum in the last year. 
 
A study of the deals shows that out of a total of 40 deals, including the ones in the pipeline, only five projects have been or are likely to be acquired by another corporate house, while institutional investors mostly account for the balance. Barring one project, all the projects have operational history of over six years, which could well be one of the reasons for investors evincing interest, since such projects reveal actual traffic potential. National highways and toll road projects are the most in-demand projects, around 94% of highway projects in the fray are national highway projects and around 87% of the projects are toll-based projects, which normally have a higher potential of giving returns to the acquirer.
 
Ind-Ra estimates that deals which are yet to be sealed have a debt size of over Rs16,400 crore. The activity pipeline has been abuzz in the last three years and Ind-Ra estimates that the highway sector has witnessed transactions of around Rs11,100 crore in debt, during February 2013-June 2016.

User

Government to convert Richardson & Cruddas loan into equity
The government on Wednesday said that it will convert its loan to Central Public Sector Enterprise Richardson & Cruddas (R&C) into equity.
 
The proposal of Department of Heavy Industry for enabling R&C to come out of the purview of the Board for Industrial and Financial Reconstruction (BIFR) was approved by the Union Cabinet.
 
"For this purpose cabinet approved the conversion into equity of the Government of India loan of Rs101.78 crore given to the company, alongwith the interest amounting to Rs424.81 crore accrued on this loan," an official statement by the Union Cabinet said.
 
"The cabinet further approved in principle, the strategic disinvestment of Nagpur and Chennai units of the company and shifting of operations from Mumbai land to other locations of company."
 
The cabinet statement elaborated that the company's land at Mumbai will be converted from lease hold to "Occupation Class II" so as to enable the company to identify the best use of this piece of land for optimal utilization as per government guidelines.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

User

Government decides to wind up Hindustan Diamond Company
The government on Wednesday said that it is initiating the process of winding up Hindustan Diamond Company (HDCPL).
 
The decision was taken by the Cabinet Committee on Economic Affairs (CCEA), to wind up the 50:50 joint venture company of the government of India and De Beers Centenary Mauritius (DBCML). 
 
"The winding up of HDCPL is not likely to affect supply of rough diamonds to Indian diamantaires as Indian diamond industry has grown in these years and several Indian players are sightholders with top diamond producers now," an official statement from the CCEA said.
 
"Also, with the objective to facilitate the constant supply of rough diamonds and to make India an International Diamond Trading Hub, the government has created a Special Notified Zone (SNZ) at Bharat Diamond Bourse, Mumbai, in 2015."
 
The CCEA statement elaborated that at present, viewing operations are being carried out in the SNZ at Mumbai -- wherein Foreign Mining Companies (FMCs) only display their rough diamond lots to the Indian manufacturers and then take these back.
 
"Thereafter, the sales are carried through e-auction from offices situated in other countries to Indian manufacturers. This facility has enabled even smaller Indian players to have direct access of supply of rough diamonds," the statement said.
 
The company was incorporated in 1978 under the Companies Act, 1956. 
 
The company was formed to supply rough diamonds to processing industry in India, particularly to small and medium diamond jewellery exporters.
 
The small and medium diamond jewellery exporters had no direct access to rough diamonds from Diamond Trading Company (DTC), London -- the marketing arm of De Beers, which held a very large chunk of the world's rough diamonds market. 
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)