The National Highways Authority of India (NHAI) board on Wednesday approved the proposal allowing IDFC to buy out the 74% stake equity in the Delhi-Gurgaon expressway project from the current developer DSC. Sources told FE that IDFC, the lead banker in the lender consortium, will pick up 74% stake while of the remaining 26%, 24.8% will be with DSC and 1.2% with the Jaypee Group. Since IDFC is likely to pick up the entire debt of R1,600 crore of the DSC, the 74% stake transaction would take place for a token amount of R1.
Sources said IDFC will give the day-to-day management of the expressway to Feedback Brisa Highways OMT, a 60:40 JV between Feedback Infra and Brisa. IDFC, in turn, owns a 24% stake in Feedback Infra.
Sources said NHAI was keen that IDFC pick up the entire 100% stake in the project but it could not be done at this stage because of some policy restrictions in the model concession agreement. The issue would be taken up once the restrictions are lifted through suitable amendments. The ministry of road transport and highways is seeking Cabinet approval for an easier exit policy for road developers which would allow the concessionaire to make a complete exit immediately after commencement of commercial operations. Under the current policy, the original concessionaire has to keep at least a 26% stake for the entire concession period. A 100% exit is possible only once the new policy is in place.
“IDFC had earlier expressed interest to buy out 74% of the equity held by DSC but we asked them to buy out the entire 100%,” an official said.
In February 2012, NHAI had sent a termination notice to DSC alleging operational incompetence and raising loans worth R1,275 crore from IDFC without prior approval from the authority. DSC had then moved the Delhi High Court challenging the NHAI's move. A court-initiated settlement was reached between the two under which DSC was required to construct more toll plazas along the expressway to ease traffic but NHAI remained sceptical of the developer’s ability to run the project.
Once the 100% rights go to IDFC, the financial institution will be collecting toll till 2023 to recoup the funds. For NHAI, salvaging the project is crucial in sustaining investor interest in public-private partnership projects in the sector.