SREI Infrastructure Finance, a diversified company with presence in equipment finance, project finance and strategic investments, is planning to raise up ₹1,200 crore through divestment of stake in road assets to a strategic partner or sovereign fund, or come out with an initial public offer of the road holding company.

Hemant Kanoria, Chairman and Managing Director of SREI Infrastructure, said, “We are in parleys with various merchant bankers for the valuation and expect to complete either strategic stake-sale or come out with an IPO of the road holding special purpose vehicle this fiscal.”

Better market conditions

Interacting with BusinessLine at the Indian School of Business, Kanoria said, “We believe the market conditions are better than before but still not where infrastructure companies and the government would have wanted it to be. Having invested significant amounts in development of 14 road projects, directly or through strategic partners, such as Madhucon Projects, and KMC, among others, we believe it is time to divest stake in these assets and re-invest in new infra projects.”

While there is some appetite among investors in the domestic market, most foreign equity investors are still not getting into the infrastructure space. There is another section of investors such as pension funds from Canada and sovereign fund investors, who are interested in long-term assets and these road projects fall in that area, he said.

Referring to the company’s move to consolidate some of the existing assets while divesting in others, Kanoria said, “This move is part of the business strategy to churn the existing portfolio. Even in a tough market we divested stake in the telecom towers business Viom Networks to American Tower Corporation with a deal of ₹3,000 crore, and earlier, we had bought out BNP Paribas stake in the equipment finance business.”

The SREI CMD, who has invested in companies such as Kingfisher and Deccan Chronicle Holdings, made a timely divestment in Kingfisher about two years ago for ₹600 crore. However, the company, which lent ₹200 crore to DCHL is struck with this investment, which however is backed by assets.

Kanoria was at ISB’s SREI Infrastructure Club and addressed students of the Leadership Programme in Infrastructure Management offered by ISB’s Punj Lloyd Institute of Infrastructure Management.

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