Mumbai: Essel Infraprojects Ltd is in talks with infrastructure developers and private equity (PE) companies to sell a part of its roads portfolio, three people close to the development said.
The Subhash Chandra-controlled company has placed six road projects on the block and is seeking a combined enterprise value of ₹11,500 crore, one of the three people said. The company wants to complete the sale by June, the person added, requesting anonymity.
Selling the roads portfolio will help Essel Group generate funds for setting up a plant to manufacture lithium-ion batteries that are used in electric vehicles. In July, Essel Infra said it would invest ₹1,750 crore in Uttar Pradesh to set up charging stations for electric vehicles and was looking to buy lithium mines outside India.
The second person said Essel Infra has been in talks with several companies, including road developer Cube Highways and Infrastructure, backed by infrastructure fund I Squared Capital; Adani Enterprises, which made its first investments in public infrastructure in 2018; and three Canadian pension funds-Caisse de dépôt et placement du Québec (CDPQ), Canada Pension Plan Investment Board (CPPIB) and Roadis, a highways platform controlled by Canadian pension fund PSP Investments.
An Essel Group spokesperson said the company “confirms the ongoing discussions with all the prospective partners in the ecosystem, pertaining to the divestment of its road portfolio”.
An Adani Group spokesperson said: “As part of our business growth strategy, we continue to evaluate various opportunities. We will inform all stakeholders if and when something concrete emerges.” A CPPIB spokesperson declined to comment. Emailed queries sent to CDPQ, Cube Highways and Roadis went unanswered till press time.
Essel Infra has 14 road projects in its portfolio, of which six are national highways and the rest state highways, according to the company's website.
“Adani and Cube are likely to be the front runners,” the second person said, requesting anonymity. “Last year, Adani Infra had hired Krishna Prakash Maheshwari as CEO. He used to head Essel Highways earlier and knows the Essel assets well. Adani Group made its first investment in public transport infra last year, with a highway project in Chhattisgarh. Cube has been one of the most active buyers in the roads space in India and had bid the highest for NHAI's (National Highways Authority of India's) recent toll-operate-transfer auction. Essel has engaged Ambit Capital to advise on the sale.”
Vijay Agrawal, executive director, Equirus Capital Pvt. Ltd, expects deals in the highways space to be driven by foreign private equity. “Developers are cash-strapped and struggling with financial closure in several of their own projects. I think the trend for 2019 will be developers selling completed assets to PE players to recycle capital.”
Essel Group was founded in 1926 by Jagannath Goenka and has business interests in media, packaging and infrastructure. Last November, it decided to sell a 50% stake in its media business arm, Zee Entertainment Enterprises Ltd, to a global strategic partner. Essel Infra has also been offloading its public infrastructure projects, starting with the sale of four power transmission projects for an enterprise value of ₹6,000 crore to Edelweiss group-backed Sekura Energy Ltd in October. In November, Mint reported that Essel had closed the sale of its solar power projects to private equity investor Actis Llp for ₹5,500 crore.
Mint reported last week that Essel Group is seeking to raise $400 million in a structured credit transaction to refinance part of its promoter debt.