Kuwait Investment Authority has signed a definitive agreement to invest $300 million (Rs.2,000 crore) in GMR Infrastructure Limited, it was announced here on Friday.
Kuwait Investment Authority, one of the largest and oldest sovereign wealth funds of the world, agreed to subscribe to 60 year long Foreign Currency Convertible Bond (FCCB) due 2075 to be issued by GMR.
The conversion price of Rs.18 represents approximately 30 percent premium to the 3 months average share price of GMR.
The completion of the transaction and receipt of funds is subject to fulfillment of customary closing conditions for transactions of this nature and procuring necessary approvals.
Announcing the transaction, GMR Group chairman G. M. Rao said this is the largest bilateral investment of Kuwait Investment Authority in India. "This investment shows confidence of sovereign investors in the long term policies being implemented by the Government of India, particularly in the infrastructure space," he said.
He thanked Kuwait Investment Authority for choosing GMR Group for their first bilateral investment in the country.
GMR's FCCB issuance is the longest tenor convertible issuance out of India and will have several "equity-like" features such as long tenor, unsecured and subordinated status and mandatory conversion.
The proceeds from the FCCB will be primarily used to repay certain outstanding obligations of GMR and its subsidiaries, GMR Infra said in a statement.
Farouq Bastaki of Kuwait Investment Authority, said they believe that GMR is well positioned to play an important role in India, as the country aggressively expands its infrastructure footprint in the coming years.
"We look forward to participating in GMR's growth as a long term investor and build a deeper relationship," he said.
GMR managing director Kiran Kumar Grandhi said they believe that this will be a game changer for GMR Group.
"It will symbolise high quality investors' confidence in the long term opportunity in GMR. It will help the company to meet the challenges being faced by the sector and deleverage our debt exposure. This also represents one more milestone in the GMR's turnaround journey and strengthens our balance sheet and prepares the groundwork for our next phase of profitable growth," he said.
