GMR Infrastructure on Wednesday announced that it has agreed to sell 74% stake in its GMR Jadcherla highway project in Andhra Pradesh to Macquarie SBI Infrastructure Fund for a total consideration of R206 crore. The divestment is part of the infrastructure group’s strategy to reduce finance costs, which have been dragging down quarterly earnings, by selling off assets to create a better portfolio and re-investing in low equity, high margin businesses.
The Bangalore-based infrastructure developer said the agreement was signed with Macquarie SBI Infrastructure Investments and SBI Macquarie Infrastructure Trust, the two fund managers based in Singapore and Mumbai, respectively.
The 58-kilometre highway project, connecting Farukhnagar and Jadcherla, was being operated by GMR since 2009 under a 20-year concession agreement with National Highways Authority of India. GMR Jadcherla Expressways, the subsidiary company running the project, is also planning a bond issue that would help in replacing high cost debt with lower-cost funds.
GMR said it will receive a consideration of about R195 crore immediately and about R11 crore on completion of certain conditions for the sale of the 74% stake. The company’s original investment for the corresponding 74% stake was about R146 crore, a company statement said.
Macquarie SBI Infrastructure Fund is an India-focused infrastructure fund managed by the Macquarie SBI joint venture located in Singapore, and its total fund size is around $910 million. The SBI Macquarie Infrastructure Trust, managed from Mumbai, has a total fund size of R1190 crore ($260 million), representing investors located in India.
In 2011, Macquarie SBI had invested $200 million for an equity stake in GMR Airports Holding, the company which runs the Delhi and Hyderabad airports.