Infrastructure companies GMR, GVK, Lanco and IVRCL, among others, are divesting stakes in various projects to reduce their debt burden and free up equity for redeployment in new projects.

GMR has taken lead in the divestment process, selling stakes both in India and overseas. It has exited from the Istanbul airport project as well as a power plant project in Singapore, and pared its interest in an overseas mining project. Within India, it has divested its stake in a road project and a power plant. Sources in the infrastructure sector say that the company is likely to divest a stake in at least one more road project.

GVK has roped in Aurizon as a partner for its rail infrastructure in Australia. It has also attracted investors for its Hancock Coal infra project.

IVRCL has divested stakes in three road projects while Lanco Infratech is in negotiations with a couple of potential buyers for a stake in the Budhil hydel project and Udupi thermal power plant

Tough environment Poor liquidity, low investor interest in a sector plagued by regulatory challenges, and mounting debt due to lower cash flows, are together pushing infrastructure companies to proactively divest stakes in some cases. In others, lender consortiums have asked them to divest their holdings.

Interactions with the Chief Financial Officers of some of the diversified infrastructure companies indicate that the stake divestment process will only accelerate in the months ahead.

Isaac A. George, Chief Financial Officer, GVK, stated that the company expects to close a divestment deal during the year for its airports business and possibly for a coal project in Australia.

T. Adibabu, Chief Operating Officer, Finance, Lanco Infratech, said the company was in talks for several projects, including a solar power unit, for a stake sale and expect to close them during the year.

In fact, divestments would have been concluded last year in a few more projects but for the market sentiment.

Recently, SEW-Navayuga divested a stake in a road project, while Meenakshi Energy sold a controlling stake in a project near Krishnapatnam to GDF Suez. Madhucon Projects has expressed its intent to divest a stake in a power project and a couple of road projects.

These deals will require about six to nine months of due diligence and for the process to be concluded.

Restructuring debt The RBI has hinted at concerns over rising debt and its quality, and the potential for delinquencies. The number of companies knocking on the doors of its Corporate Debt Restructuring cell is growing.

Lanco Infra, Gammon, Soma Enterprises and CCCL are among those who have either restructured their debt or are in the process of doing so.

> rishikumar.vundi@thehindu.co.in

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