Welspun Enterprises sells road assets to Actis for ₹6,000 crore

Global investor Actis has bought six operating highway toll road projects of Welspun Enterprises for ₹6,000 crore.

The highway portfolio comprises five completed hybrid annuity model (HAM) assets – Welspun Delhi Meerut Expressway Pvt. Ltd., Welspun Road Infra Pvt. Ltd., MBL (CGRG) Road Ltd., MBL (GSY) Road Ltd., Chikhali Tarsod Highways Pvt. Ltd. – and one operating build–operate–transfer toll asset Welspun Infrafacility.

Welspun said the enterprise value excludes construction linked milestone and grant payments of around ₹3,000 crore received or receivable from National Highways Authority of India (NHAI) and Public Works Department of Government of Maharashtra, thus, valuing the highway portfolio being exited at approximately ₹9,000 crore.

The highway portfolio as on the date of first closing is expected to have a debt of ₹3,627 crore and a total equity investment of ₹1,613 crore, the company says in a stock exchange filing.

The completion of the above transaction is subject to completion of customary and regulatory compliances and approvals from NHAI, PWD, and lenders, it adds.

After this proposed exit, Welspun Enterprises’ road asset portfolio would comprise of two under construction HAM road projects (Sattanathapuram - Nagapattinam and Aunta – Simaria Road projects), which have a total project cost of around ₹3,900 crore.

"With this proposed transaction, we will deliver to our stakeholders the entire value chain of successfully winning-constructing-stabilizing-monetizing of road assets. Similarly, we will explore exiting the balance under-construction road assets and oil and gas assets at the right time and at the right value," says BK Goenka, chairman, Welspun Group.

"This is a landmark moment for the company. We won India's first road HAM project in 2016 and during the last 5 years created a strong portfolio of over ₹12,000 crore in the road sector and ₹6,500 crore by way of EPC orders in the water sector, while leveraging our strong sector knowledge and experience," he adds.

Welspun Enterprises said it has a robust engineering, procurement, and construction (EPC) order book of around ₹12,500 crore, comprising ₹6,500 crore in the water sector and balance ₹6,000 crore in the road sector.

Commenting on the deal, Sumit Sen, partner at Actis, says: "We are pleased to deepen our commitment to India by supporting the development of some of India’s most exciting infrastructure projects. The assets under the highway portfolio are well diversified and strategically located; they are a highly attractive addition to our portfolio that aligns perfectly with ALLIF’s investment mandate. We look forward to pursuing similar long life infrastructure projects, including Welspun Enterprises' balance under-construction road portfolio, in line with our investment thesis."

Ernst and Young LLP acted as exclusive advisor for Welspun Enterprises.