In a modest beginning to its asset-monetisation exercise, Hindustan Construction Company’s (HCC) infrastructure development arm, HCC Concessions, announced the sale of Nirmal BOT, an annuity road project in Telangana, for a total consideration of Rs 64 crore to Highway Concession One, an entity majorly held by IDFC Alternatives managed India Infrastructure Fund.
Highway Concessions One will acquire 74% stake upfront while the balance 26% shall be acquired upon receipt of approval from the National Highways Authority of India (NHAI), according to a press release issued by HCC on Friday. Additionally, Nirmal has also received an arbitration award in its favour for Rs 16.67 crore, which shall be payable to HCC, upon receipt, the release said.
The valuation for the project has been on a par with the book value. HCC’s total investment in the project is Rs 63 crore in the form of 50% equity and 50% sub-debt, a HCC spokesperson said. There is a debt of Rs 231 crore on the project, which will also move to IDFC Alternatives, he said.
Commenting on the valuations of the project, the spokersperson said, “As revenue in an annuity project is fixed, so the upside for equity holders is not available. In toll road projects, valuations take into account risks related to fluctuations in growth rates, traffic compositions, inflation and future cash flows, so valuations are much higher.”