The transaction, among the largest equity fund raising by a listed infrastructure company, will help IRB deleverage its balance sheet and have access to new growth capital to participate in new projects and the government’s ambitious asset monetization plan, said Founder and Chairman Virendra Mhaiskar told ET.
“In the last few years, we have acquired large assets and now we have great visibility of opportunity as the government has announced the monetization plan and the model concession agreement. There is a renewed vigor to re-look at BOT (build-operate-transfer) projects,” Mhaiskar said.
“We wanted to deleverage the balance sheet and have significant growth capital and that’s why we have got these long term investors,” he said.
Ferrovial S.A, through its subsidiary Cintra INR Investments BV, would invest equity capital of up to Rs 3,180 crore in IRB. Cintra will own up to 24.9% stake in the company post the investment. Whereas, GIC through its affiliate, would invest Rs 2,167 crore in the company for a maximum stake of up to 16.9% in IRB. Mhaiskar’s stake in the company will reduce to 34%, but he will continue to have the management control.
The two transactions are subject to execution of definitive documents, approval of IRB shareholders, receipt of regulatory and lenders approvals and satisfaction of customary condition precedents.
The issue price for both transactions is Rs 211.79 a share, which is at 28% discount to the share closing price of Rs 294.40 on BSE on Tuesday. Shares of the company soared since Thursday after the company said it will mull a fundraising plan.
From the proceeds of the transactions, IRB would use Rs 3,250 crore to repay corporate debt, Rs 1,497 crore as growth capital and Rs 600 crore for general corporate purposes.
Andres Sacristan, chief executive officer, Cintra said, “Cintra would work with IRB to enhance its competitive position in the Indian market. Our international experience as an investor and operator would optimize IRB’s operational capacity and ESG compliance, a field in which Cintra and Ferrovial are international leaders”
In the eventuality that IRB is unable to issue shares to both investors concurrently, the total investment would get reduced to Rs 4,307 crore -Rs 4,462 crore, the company said.
“As a long-term global investor, we see India as a key market, given its strong economic fundamentals and infrastructure development potential,” said Eng Seng Ang, chief investment officer (infrastructure) at GIC.
Separately, IRB reported total income of Rs 1,504 crore in the second quarter of 2021-22, up 29% on year. The company’s profit after tax, after the share of joint ventures, was Rs 42 crore in the quarter as against a loss of Rs 20 crore in the same period a year ago. The company is a developer of roads and highways and the group’s portfolio includes 23 projects, which includes 7 projects as wholly owned concessions, 9 projects under a private infrastructure investment trust (InvIT) and 7 projects under its public InvIT. IRB’s order book was worth Rs 13,164 crore as on end-September.