IL&FS Transportation Networks Ltd (ITNL), an IL&FS group company, is ready with its ₹3,500-crore infrastructure investment trust (InvIT) but is waiting for the appropriate time to hit the market.

The toll-road builder, which is also looking at raising funds through bonds, is deliberately going slow in bidding of newer projects as financing is becoming more and more difficult in the build-operate-transfer (BOT) sector.

In a conversation with BusinessLine , ITNL Managing Director K Ramchand says the firm has signed a term sheet for selling its stake in a Chinese project. Excerpts:

What is the status of ITNL’s ₹3,500-crore InvIT?

The InvIT is definitely going through. Earlier, there was a more favourable tax dispensation, but now it has become taxable. So there has been a loss of internal rate of return (IRR) due to tax. Secondly, the earlier two InvITs that go listed have also not performed well in the market.

If the two issues had not come up, we probably would have been home and dry.

First, we are trying to sort out the tax problems. We have made some representations and will see how the Finance Ministry responds to that. With all approvals in place, we are ready to launch it. It’s only a question of timing.

You were also looking at raising funds through bonds...

We have raised some funds through bonds, but that has been mainly to refinance our infrastructure projects.

As a project gets commissioned, especially an annuity project, there is no point in continuing with a bank, as the corporate debt market is far more competitive than a bank loan. So we have refinanced a lot of those annuity projects. We are looking at external borrowings rather than domestic borrowings.

Have you received any L1 (lowest bidder) status? What’s your position on Mumbai Trans Harbour Link and Mumbai-Nashik Expressway?

We have been L1 in the Zojila tunnel project (a tunnel connecting Srinagar to Leh-Ladakh region), and we are expecting it to be awarded this month. On the Mumbai Trans Harbour Link, we didn’t win that. Out of the three packages, two have already been awarded. On the expressway, we are waiting. We were qualified in the previous round.

We are deliberately going slow in our bidding. Since the banks have taken a back seat, financing is becoming more and more difficult in the BOT sector. So unless the banking sector revives itself or we are able to find out a different method of financing, we will go slow on bidding.

You were also looking at buying stressed assets...

We will look at stressed assets from the group level rather than ITNL. We had set up a fund with US-based private equity firm Lone Star, which today stands at $500 million. The main focus of the fund is to buy stressed assets. We are not looking at just roads, it can be power, it’s across infrastructure. The momentum is still not built up as far as stressed assets are concerned.

What are your stake sale plans in your global projects?

We are doing work in Vietnam, Ethiopia, Botswana and the US. In China, we own 49 per cent in a toll road project in Chongqing province, and we have a annuity project in Spain. We have signed a binding term sheet for the sale of our stake in the Chinese project. So it is a question of time before we are actually out of that project. We may keep a minority stake. As far as the Spanish assets are concerned, we haven’t seriously looked at divesting it.

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