GMR Infrastructure has finalised plans to raise debt of Rs 5,400 crore to finance its recently won highway project between Rajasthan and Gujarat. Six months earlier, the publicly-held company, based in this city, had in the face of global competition won the bid for six-laning of the 555-km Kishangarh-Udaipur-Ahmedabad stretch, the country’s first expansion of a mega highway.
The company has signed an agreement with IDBI to be the lead consortium for debt syndication. IDBI will underwrite half the debt and syndicate the rest. Senior GMR Infra officials said they’d been able to strike the deal at a competitive interest rate of around 11.5 per cent (though a company spokesperson said the interest rate was still being finalised), with the entire amount to be disbursed in 15 years.
GMR will also start to earn revenue from the first day, as this is expansion of an existing highway. This project will be implemented through a design-build-finance-operate-and-transfer model. This section is a part of the Delhi Mumbai (Golden Quadrilateral) corridor and goes through the newly announced Delhi-Mumbai Industrial Corridor (DMIC) project, which has very high growth potential for commercial and tourist traffic. With debt almost tied-up, GMR Infra is finalising plans to also infuse equity into this project. “We need to invest around Rs 2,000 crore as equity over the next three year, from July 2012. While we are ready with around Rs 800 crore from our side, we are in the final stages of raising the rest from private equity players,” the officials added.
When it finalises plans to raise PE in the highways business, the company would be putting this division on the path of being independent, like its peers in the airports and power divisions. “The road map for the three verticals is to go public, based on their own strengths. As part of this, we have to ensure they are able to raise equity in their own vertical and need not always rely on GMR Infrastructure to infuse equity,” a senior official added.
The airports and power divisions have over the past 18 months raised Rs 1,500 crore and Rs 1,400 crore, respectively, from various PE funds. Marquee global investors including Temasek, SBI-Macquarie, IDFC, Argonaut, JM Financial and Ascent Capital were part of the earlier fund raise and a few more funds, such as Stanchart PE and 3i, are in discussion for equity infusion.