Kolkata-based Bharat Road Network Ltd (BRNL), a unit of Srei Group, is on the lookout for acquisition of stressed assets in the road sector.
According to Brahm Dutt, Chairman, BRNL, plans are also afoot to ramp up organic growth by bidding for new projects primarily on toll-operate-transfer (TOT) basis.
“A number of investors are looking to exit; the mounting NPAs have also put banks under pressure, throwing up assets for acquisition at attractive prices,” Dutt told
The company will be interested in acquiring a 4-lane highway with a road length of 100 km.
“We keep on looking for opportunities. We are talking to people and investment bankers. It will be optimum for us to look at assets which have a road length of 100 km,” he said.
The funding for its proposed organic and inorganic expansion will come from its IPO proceeds, Dutt said.
Funding stratgeyBRNL is looking to raise around ₹600 crore through sale of its 2.93-crore equity shares, which will open on September 6 and close on September 8.
Of the total amount raised through the offer, about ₹350 crore will be used for acquisition of the subordinated debt given by Srei to three special purpose vehicles — Solapur Tollways Private Ltd, Kurukshetra Expressway Pvt Ltd and Mahakaleshwar Tollways Pvt Ltd — and ₹50 crore will go towards funding an existing project in Maharashtra. Nearly ₹150 crore will be used for general corporate purposes.
“We will have ₹150 crore cash in hand, and we expect a post-IPO networth of around ₹1,174 crore. We can leverage these for funding our future expansion plans,” said Rajesh Sirohia, Head of BRNL’s Corporate Strategy and Investment.
Future plansAt present, BRNL has five operating projects and one under construction, which is expected to be completed by May 2018. All of its projects are currently under the BOT (build-operate-transfer) model. The company is expecting an order book of around ₹4,000 crore in FY19.
BRNL is expecting 6-7 per cent traffic growth; with toll rates on the rise, this could translate into 8-9 per cent growth in topline, Sirohia said.
Moving forward, the company will bid for assets where it could have a stake above 51 per cent. BRNL currently holds stake ranging from 39-49 per cent across its six projects.
“Our approach so far has been to take an EPC partner along. But moving forward, we would like to have a majority stake as that gives us flexibility, control and better management,” Dutt said.