 "Ashok Kheny, MD, Nandi Infrastructure")
Global financial powerhouse JPMorgan, along with another global private equity company 3i Capital, is expected to land a stake worth close to $200 million in BF Utilities, a publicly-held company and a part of $2.4-billion Kalyani Group led by Baba Kalyani, who also owns the much-respected automobile components company Bharat Forge. BF Utilities is executing the Rs 6,000-crore Bangalore-Mysore expressway for the past two decades.
Ashok Kheny, managing director of Nandi Infrastructure Corridor Enterprise (NICE), a subsidiary of BF Utilities, told Business Standard that it was in the process of restructuring NICE as well as its special purpose vehicle (SPV) subsidiary Nandi Economic Corridor Enterprise (NECE) to enhance shareholder value. "As part of this process, we are looking to merge NECE into the parent instead of a three-layer structure. JPMorgan and 3i, which had invested in the SPV NECE, will most probably land equity in the publicly-held BF Utilities. The process is underway and we will have clarity on the amount of stake which the investor will be getting," said Kheny. The promoters currently own a little over 66 per cent in BF Utilities.
NECE was floated as an SPV in 1999 to develop close to 6,100 acres for various aspects of the expressway, including the peripheral ring road, link road, 12 km of expressway, one township and one interchange. As part of the initiative, NECE has managed to complete 41 km of peripheral ring road, 9 km of link road, 6 km of the expressway and eight interchanges. The rest of the expressway project has been held up for want of various approvals for acquiring land as well as for the township.
The expressway, which is prone to legal wranglings, has been the centre of protracted negotiations between the management and former Karnataka chief minister Deve Gowda, who has been opposing the project in its totality over allegations of land grab.
The NECE project has so far seen investments of close to Rs 3,600 crore with a debt component of around Rs 1,600 crore, while there has been private equity infusion from JP Morgan and 3i Capital. BF Utilities owns 74 per cent in NICE, and in turn NICE owns 68 per cent in NECE.
BF Utilities has floated the NICE project with an aim to developing 20,193 acres over a period of time to build a total of 111 km of expressway connecting Bangalore to Mysore, 41 km of peripheral ring road, nine link roads, five townships, besides 16 interchanges. The project which has been at the centre of much debate in Karnataka, has so far managed to be a good option for heavy trucks to move away from the city and it is understood that it is generating revenues of around Rs 14 crore a month.
Kheny said that he is hopeful the project would get clearances for land acquisition after the Lok Sabha elections. "At that juncture, we may look to raise further resources. Grouping various project under a REIT (real estate investment trust) and listing is certainly an option to raise around $500 million," he added further.
