A new business model is taking shape along the highways.
Developers are combining their project-implementing special purpose vehicles (SPVs) under a holding company and monetising- a move set to emerge as a leveraging option for developers and an opportunity for smaller construction companies which can buy a ready highway and gain from operating it.
Two highway developers, Isolux India and Soma Enterprises, have just done this - forming holding companies by aggregating their equities in highway project implementing SPVs.
The companies are jointly implementing around nine highway projects. Taking out their share of equities in the SPVs, both have formed two different holding companies where stakes have been sold to private equity investors.
JP Morgan is said to have picked up about 49% stake in the holding company of Isolux, and an undisclosed stake in the holding company of Soma Enterprises, known as Soma Tollways, for Rs.500 crore in July this year.
DNA Money could not verify this independently with JP Morgan.
Flush with the liquidity infusion, Soma Enterprisese is looking to go down the road further.
Says Ankineedu Maganti, director, Soma Enterprises: “We have equities from ten highway-project SPVs in Soma Tollways and have recently got the private equity funding. As of now, we will not be diluting any further stake in the holding company. But we will be looking at SPV acquisitions.”
Experts feel such aggregation of project-level SPVs for monetisation makes sense. “SPVs by themselves do not have much manoeuvrability in raising finances. Holding companies, on the other hand, can even go for a public issue - something that cannot be done at SPV level. Additionally, unlike an SPV, there is no cap on the stake that can be diluted in a holding company,” said Vishwas Udgirkar, partner, (infrastructure), Deloitte.
Industry sources said GMR and Larsen & Toubro are expected to follow suit by bundling and monetising their SPVs.
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