IJM Infra mulls stake divestment to PE partners

Written by Kavitha Venkatraman | Hyderabad | Updated: Nov 26 2008, 06:37am hrs
IJM (India) Infrastructure Ltd (IJMII), a subsidiary of IJM Corporation Berhad (IJM)-one of the largest and diversified construction groups in Malaysia, is looking at diluting its equity stake in matured assets to unlock some portion of investments for better cash flow. The company is open to the idea of offloading its stake to private equity (PE) partners. It has received several enquiries from serious domestic and international PE players in this regard.

Speaking to FE, Teh Kean Ming, deputy chief executive officer and deputy managing director of IJM Berhad said, we are looking at giving away a portion of our equity stake in some of the matured assets (projects that are completed), to unlock the value of the assets to a certain extent. The company is also willing to dilute equity in some of the ongoing projects. The value realised in this process, would be used to meet the capital requirements of the existing and future projects of the company. Equity dilution will happen only at the SPV level and not at the company level. IJMII will be a 100% subsidiary of IJM Berhad.

Several domestic and international PE firms with interest in construction activity are in talks with IJMII but nothing has been finalised as yet.

In fact, it is too early to get into the specifics. But, yes, if some PE firm says that they are interested in infusing funds in our projects for equity, we are open to it. Only firms that see future growth by investing in our assets, will inject capital into our business, said P K Agarwal, chief operating officer of IJMII.

IJMII has been actively participating in high growth opportunities offered by Indian infrastructure industry, more specifically in the construction sector. The main thrust is in construction and upgrading of highways and property development including world class townships and commercial buildings using modern technology and equipment. The current order book of the company is at Rs 2,400 crore.