Gammon India wants to buy into core projects

NDTV PROFIT EXCLUSIVE

India has never built so ambitiously before and companies have seized on the infrastructure boom to hammer out ambitious mergers and acquisitions. The latest trend: Engineering and construction firms that want to buy into infrastructure projects.

Gammon, one of India's largest construction firms, is working overtime on two big-ticket acquisitions: one, an urban infrastructure project, the other a power project worth Rs 1,000 crore.

And it wants these acquisitions to materialise before the IPO of its wholly-owned subsidiary, Gammon Infrastructure Projects Limited (GIPL).

"Now we have seven SPVs where the work has commenced and we're now in the process of acquisition of two projects, which is in the due diligence stage right now. We can't share more details about the target companies, because we're bound by a confidentiality agreement," Pervez Umrigar, MD, GIPL, told Profit.

GIPL manages infrastructure projects under separate SPVs and it plans to have 11 SPVs before its IPO in a few months. GIPL is targetting over Rs 400 crore through IPO or private placement.

Gammon wants to strengthen its position in infrastructure and power. And of the five bids it has submitted, it feels it can win at least two big projects in a month's time.

But the big push says the management will come from its twin acquisitions which will drive its valuations. Ande the management is hoping all that will happen with relatively modest cash outflows.

"Each project is about Rs 500 cr and we'll buy out at a certain value. Equity infusion, too, will be in a phased manner, over the next 3 years," said Mr Umrigar.