IL&FS road projects: 6 investors show interest in asset sale

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By Bhavik Nair & Shubra Tandon

At least six investors that include I Squared Capital, Canada’s CDPQ, NIIF, Brookfield, Edelweiss and Lone Star are understood to be conducting due diligence ahead of submitting their bids for 18 road assets of IL&FS, a source aware of the developments told FE.

The bids are likely to start coming in by mid-July and should not go beyond mid-August, the source indicated, adding that these assets if sold would likely fetch a valuation of around `20,000 crore. Emails sent to the aforesaid names remained unanswered till the time of going to press.

Of the 18 assets, completed projects of IL&FS — Pune-Solapur, Hazaribagh-Ranchi and a bouquet of assets under Thiruvananthapuram City Roads and Road Infrastructure Development Company of Rajasthan (Ridcor) — are said to be garnering more interest from investors, according to the source.

The four-lane project of Hazaribagh-Ranchi with an aggregate length of about 319 lane km in Jharkhand is an annuity project developed on a build-operate-transfer basis.

The concession for this project was awarded by NHAI for a period of 18 years, including an initial construction period of two-and-a-half years. Its concession period ends in 2028. The project received appointed date in 2010.

The Pune-Solapur project is a four-lane one with an aggregate length of about 571 lane km between the two cities of Maharashtra on the National Highway-9. The project was awarded by NHAI on design, build, finance, operate and transfer on toll basis for a period of 20 years from appointment date. According to the information on the company’s website, the appointed date of the project is not yet achieved, while the financial closure of the project was done in January 2010. The project was scheduled to be complete in 24 months from appointment date.

Meanwhile, Thiruvananthapuram City Roads Improvement Project in Kerala has an aggregate length of approximately 158 lane km. The company completed Phase I in November 2006. There is limited public information on the rest of the two phases.

Ridcor was incorporated as a 50:50 joint initiative of the government of Rajasthan and IL&FS for implementation of the Mega Highways Project. The state government had adopted this public-private partnership route to leverage its limited financial resources for implementing a project worth `2,465 crore. Under Phase I of the project, five road stretches aggregating to 1,053 km were developed under a 32-year concession period. Subsequent to the completion of Ridcor Phase I project, the state government awarded another seven new road projects under Phase II aggregating to 85 km.

FE had reported earlier that the Uday Kotak-led board of IL&FS has set up a six-member committee for exploring debt restructuring of at least five identified entities. The board has identified entities, including IL&FS Tamil Nadu Power Company, Road Infrastructure Development Company of Rajasthan, West Gujarat Expressway, Jharkhand Road Project Implementation Company, for debt restructuring.