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| Edited By: KV Ramana |Source: DNA |Updated: Mar 30, 2018, 04:16 AM IST
Infrastructure major IVRCL is gearing up to put its build-operate-transfer or BOT assets on the block and confine itself to cash-based contracts.
The company is also merging IVRCL Assets and Holdings Ltd, which handles the BOT projects, with itself, and demerge its real estate asset base into a separate company.
IVRCL is also said to be appointing consultants to scout for buyers for its BOT assets. However, it is still not clear if it would exit the projects completely or retain some stake. On Monday, the company and subsidiary IVRCL Assets informed the stock exchanges that their boards have approved an amalgamation plan.
It was in 2009-10 that IVRCL decided to transfer its BOT assets to IVRCL Assets & Holdings and justified the move by saying that the transfer of assets would strengthen the subsidiary which was otherwise dragged down by illiquid real estate.
IVRCL had also said that the asset transfer would help the parent focus more on EPC projects, including those flowing in from IVRCL Assets.
However, the reversal now took analysts by surprise. “There must be more to this than meets the eye in this exercise. The step-down subsidiaries or the special purpose vehicles are being used by many infrastructure companies to raise money by diluting stake in favour of other investors. We are yet to understand why IVRCL should take the amalgamation route to sell the assets,” said an analyst. Though communication to the exchanges has not mentioned anything about the proposal to sell the assets, consolidation through amalgamation is said to be the first step towards putting the assets together for finding buyers and good valuation.
This would also bring three road projects already into tolling into the parent company’s fold in addition to five projects that are still being executed. The company’s other assets, including the desalination plant in Chennai, are likely to be put up for sale.
IVRCL has been working on selling its real estate for some time now and talking to potential buyers.
