Piramal Enterprises to acquire road projects hit by delays

07 July 2014

Piramal Enterprises, headed by billionaire Ajay Piramal is looking to pick up road projects on offer for sale by stressed developers, in anticipation of the new government's bid to  stimulate growth and revive an infrastructure sector hit by delays.

According to a report in The New Indian Express , Piramal Enterprises Ltd, which is into the sale of drugs and financial services, has set aside Rs50 billion rupees ($837 million) for projects jeopardised by an economy struggling through its longest period of sub-5 per cent growth since the 1980s.

Meanwhile, prime minister Narendra Modi has pledged to revive economic growth and is expected to announce measures to revitalise the  extensive road-building programmes undertaken over the past decade with at least Rs600 billion worth of stalled projects.

In a recent interview with Reuters, Parvez Umrigar, co-head of Piramal's Structured Investment Group, said India never had the balance sheet needed to absorb the investments. He added, with no third-parties coming in, contractors and developers had only stretched themselves further.

He added, the group believed there was adequate appetite (among developers) in the market presently for assets to change hands.

Piramal would be branching out into roads, which is likely to be one of the more visible beneficiaries of any pro-growth government policies, and competition for assets is likely to be lower than in other infrastructure sectors, according to Parvez.

The company had signed term sheets for four projects even as the other two were in pipeline. Of the six targeted assets, three are in the south while the rest are in other parts of the country. Other details of the assets remain unknown, DealCurry reports.

In a recent development, SBI Capital Limited, a wholly-owned subsidiary of State Bank of India, and Piramal Enterprises Ltd had signed a MoU to cooperate on business related opportunities in the acquisition of controlling stakes in road projects under public private partnership (PPP).

It had been reported that under the MoU, SBICAP and Piramal Enterprises Limited had mutually agreed to engage on preferred relationship basis for advisory services for such identified road assets, with SBICAP also assisting Piramal Enterprises in obtaining necessary approvals for closing such transactions.

The group's flagship Piramal Enterprises had decided on acquisition and management of road assets six months back after providing mezzanine financing to road projects and renewable energy ventures and planning their consolidation operating under a separate management team.

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