Srei Infra to exit some road investments

Srei Infrastructure Finance is mulling exiting in the current financial year some of its strategic investments across various infrastructure sectors built over a period of time.

Besides giving loans to infrastructure projects, its main area of business, Srei has been building up a portfolio of equity investments created either directly or done through funds, in projects in sectors such as roads and transportation, power, special economic zones and telecom infrastructure.

This year Srei would exit some of these investments, particularly in the roads sector, to realise their values and also to discover prices of such assets, director Sunil Kanoria recently told DNA.

“We have been investing in various infrastructure assets. Our intent is that when some gets matured keep on churning that investment portfolio. We are intending this year to dispose some of our investments in the road sector. We have almost 10-11 good projects; some of them would be completed this year and would start tolling. So, then those can be sold and the money can be invested in other projects. We have started working on it,” Kanoria said.

Srei’s strategic investments as on first quarter-end were about Rs425 crore, of which Rs405 crore is mostly in roads. This portfolio comprises about 4,000 kilometres of roads, Kanoria said.

These projects are a diversified mix of annuity and toll-based projects mostly awarded by the National Highways Authority of India under National Highways Development Programme (NHDP).

In 2010-11 Srei, via consortium, was awarded two road projects worth Rs3,200 crore in Orissa and Arunachal Pradesh to be implemented on built-operate-transfer basis.

Srei, meanwhile, is planning to create a subsidiary to manage its roads portfolio.

Kanoria doesn’t see much difficulty in finding buyers while exiting some of these investments. “New projects are slow to come out of the government, but otherwise scope is huge in the roads sector. Disinvestment would not be a problem as there is a good appetite of infra funds. These are long-term projects where you keep getting the cash flows. Once you have completed the project and tolling has started, it becomes easier (to exit).”

The government plans to construct 35,000 kms of highways by 2014 under the NHDP. The Ministry of Road Transport and Highways has recommended an expressway network of around 18,637 kms in the country for unhindered and high-speed movement of traffic. Construction on the expressways is scheduled for completion in 2022.