IRB Infrastructure Developers is contemplating to bring in private equity participation for constructingits share of the ₹6,555 crore Ganga Expressway.

Meerut Budaun Expressway Private Limited, a wholly-owned subsidiary of IRB, formed in early January, won the bid to develop 22 per cent or 129.7 km of the access controlled six lane greenfield Ganga Expressway from Meerut to Budaun in Uttar Pradesh’s north west region.

While land acquisition for about 94 percent of the project has been completed by Uttar Pradesh Expressways Industrial Development Authority (UPEIDA), the financial closure is yet to be done, according to Virendra Mhaiskar, Chairman and Managing Director, IRB Infrastructure Developers.

“We are contemplating to execute the project under the private equity construct. About 94 per cent land acquisition already done by UPIEDA. The financial closure is the primary requirement. We will be able to start the construction pretty soon upon achieving the closure,” Mhaiskar added.

Debt-equity mix

IRB expects the project to cost ₹6,555 crore over the next three years and will finance it by ₹2,405 crore of equity, ₹2,405 crore of debt and ₹1,746 crore of viability gap funding. The company has tolling rights for 30 years.

“We are right now in discussion with the banks on finalising the debt-equity mix. This being a greenfield project, the way we have put in our bid, we have assumed around ₹2,000 crore equity,” Mhaiskar added.

Second-longest expressway

The Phase 1 of the Ganga Expressway is 594 km, six lane (expandable to eight lane) greenfield expressway from Meerut to Prayagraj being built at a cost of ₹37,350 crore, including land acquisition cost of ₹9,500 crore. It is the second-longest expressway under construction after the 1,400 km Delhi-Mumbai expressway.

Adani Enterprises is the other wining bidder and maintenance of the balance of ₹17,100 crore, 464 km of the Expressway.

In December, IRB completed an equity fund raising of ₹5,347 crore which saw preferential placements to companies based in Spain and Singapore.

Stable outlook ratings

Last week rating agency Fitch Ratings upgraded the Long-Term Issuer Default Rating on IRB Infrastructure Developers to ‘BB+’ from ‘BB’, and removed the rating from Rating Watch Positive. while providing the outlook as stable.

“The upgrade of the rating on IRB reflects improvement in its financial profile after an equity infusion of ₹5,400 crore by Singapore sovereign wealth fund GIC and Cintra. IRB used the funds to prepay ₹3,200 crore of long-term debt and plans to use the remainder for growth capex, which will reduce pressure on the company’s balance sheet,” Fitch Ratings added.

“The total order book of IRB stands at ₹18,500 crore, out of which ₹12,100 crore pertains to ECC (engineering construction and contract), which will be executed in the next 2-3 years and O&M over 8-9 years. Current EPC (engineering, procurement and construction) order book will lead to 15-18 per cent CAGR from FY22 to FY24 even without any new order,” Mhaiskar.

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