With just four road assets changing hands over the past year, it would appear developers aren’t in too much distress, though some are clearly cashing out, reports Shubhra Tandon in Mumbai. Developers are understood to have made a combined Rs 800 crore from the sales. At the last count, there were probably 200 road projects — nearly half of the highway ventures in the PPP mode — that were on the block.
Given how some Rs 60,000 crore is blocked in 200 road projects, several of which are no longer considered viable in an economy that’s growing at a much slower pace than anticipated, bankers might want to push some of the developers to sell. Promoters have been unable to infuse additional equity to get the projects back on track. Analysts point out that for some projects, the traffic volumes are running 30%-40% below the original estimates, and these projects will be hard to revive.
But buyers don’t seem to be willing to pay higher valuations and are willing to wait for better deals. However, industry watchers say a dozen deals are on the cards and could go through soon.
Recent deals include HCC Concessions’ sale of its annuity road project in Telangana — Nirmal BOT — for Rs 64 crore to the IDFC Alternatives-managed India Infrastructure Fund. The company also sold a 60% stake in Dhule Palesner Tollway to the Sadbhav Group, HCC’s joint venture partner in the project, for Rs 204 crore — around 1.1 times the book value. Madhucon Projects sold its 74% stake in Agra-Jaipur expressway to Tata Realty and Infrastructure for Rs 250 crore; analysts peg the valuation at 1.8 times the book value.
New-york-based fund ISQ Global Infrastructure Fund picked up a majority stake in Malaysia-based IJM Corporation’s Jaipur Mahua Tollway for Rs 525 crore — about 1.7 times the book.