Infrastructure Finance

News

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April 20, 2015 April 26, 2015

Policy
The central government has allowed the National Highways Authority of India (NHAI) to issue
tax free bonds worth Rs 240 billion and capital gain exemption bonds worth Rs 40 billion during 2015-16.
The Ministry of Finance (MoF) has accorded in-principle approval for the issue. Tax Free Infrastructure
Bonds to be issued by NHAI will offer tax benefits under section 10(15) (iv) (h) of Income Tax Act 1961.
Meanwhile, the central government is planning to sell road projects worth Rs 1 trillion to
foreign pension and insurance funds. Reportedly, the Ministry of Road Transport and Highways
(MoRTH) has sought Cabinet approval to sell these projects. The move is aimed at attracting investment
into the sector.
The MoF has called for a meeting with public sector banks (PSBs) on April 28, 2015 to discuss
measures to expedite the process of implementation of projects in various infrastructure sectors.
The meeting comes on the back of data released by the Department of Financial Services which shows
an upward trend in the level of non-performing assets and stressed projects of PSBs in the last four
quarters. Currently, a total of 632 projects across various sectors are with the project monitoring group of
the Cabinet Secretariat for resolution of various issues. The meeting will also be attended by officials
from the Reserve Bank of India.
The Telecom Dispute Settlement & Appellate Tribunal (TDSAT) has ruled that revenue from
non-core sources such as rent, profit on sale of fixed assets, dividend, interest and miscellaneous
income must be included while computing an operators adjusted gross revenue (AGR). Telecom
companies pay about 8 per cent of their AGR to the government as licence fee and also a percentage as
spectrum usage charge (SUC). The ruling is likely to adversely affect the telecom companies as the
inclusion of non-telecom revenue under AGR would force operators to pay more to the government.
The Telecom Commission, the highest apex body under Department of Telecommunications
(DoT), has asked the Telecom Regulatory Authority of India (TRAI) to review its recommendations
on spectrum sharing and trading guidelines. Accordingly, TRAI will send its final comments in 15
days, after which the guidelines will again be sent to the Telecom Commission. Earlier in June 2014,
TRAI had issued its recommendations on guidelines for spectrum sharing and trading. The telecom
regulator had suggested sharing of all categories of spectrum held by operators, including spectrum
allocated at old price of Rs 16.58 billion or assigned without auction. TRAI had also recommended
trading of spectrum.
The Cabinet Committee on Economic Affairs (CCEA) has three road widening projects. The
first project involves four-laning of the 108.07 km Solapur-Bijapur section of NH-13 in Maharashtra and
Karnataka. The project will be implemented on a design-build-finance-operate-transfer (DBFOT) basis
under Phase III of the National Highways Development Programme (NHDP). The project is estimated to
cost Rs 15.37 billion which includes the cost of land acquisition, resettlement and rehabilitation and other
pre-construction activities. The second project entails eight-laning of the 69.84 km Mukarba ChowkPanipat section of NH-1 in Delhi and Haryana. The project will be implemented on a DBFOT basis. The
project is estimated to cost Rs 22.04 billion which includes the cost of land acquisition, resettlement and
rehabilitation and other pre-construction activities. The third project entails six-laning of the 124.52 km
Agra-Etawah section of NH-2 in Uttar Pradesh. The project will be implemented on a DBFOT basis
under Phase V of the NHDP. It is estimated to cost Rs 17.87 billion which includes the cost of land
acquisition, resettlement and rehabilitation and other pre-construction activities.
Loans/Bonds
Gammon India Limited has announced that its board of directors will hold a meeting on April
27, 2015 to consider and approve issuance of debentures worth Rs 1 billion to the companys
promoters and their affiliates. The securities would be on a preferential basis, zero coupon unsecured
compulsorily convertible debentures. The funds raised would be categorised under the Promoter
Contribution, as envisaged under the company's corporate debt restructuring scheme approved by the
Corporate Debt Restructuring Empowered Group on June 27, 2013.
Public Offerings/Qualified Institutional Placements

Infrastructure Finance
News
Ashoka Buildcon Limited has raised Rs 5 billion through a qualified institutional placement.
The companys QIP committee has approved the issue price of Rs 175.80 per share, after giving
discount of up to 5 per cent (which is Rs 9.25 per equity share), to the floor price of Rs 185.05 per
equity share.
Toll operations company MEP Infrastructure Developers (MEP) came out with an initial public
offer (IPO) to raise funds to the tune of Rs 3.25 billion. The issuance managed to garner full
subscription, led by participation from institutional investors. The IPO received 1.1 times subscription.
The retail investor category remained undersubscribed at 95 per cent. MEP, which operates toll plazas
at about 30 locations, will use the proceeds to retire some of its outstanding debt. The company had
priced the offering between Rs 63 and Rs 65 per share. MEP had raised around Rs 0.72 billion from
anchor investors, which included Tata and HDFC Mutual Fund. The MEP IPO was managed by IDFC
Securities, IDBI Capital Market Services and Inga Capital.
Equity Moves
Sadbhav Engineering Limited (SEL)-owned Sadbhav Infrastructure Project Limited (SIPL) has
signed a definitive share purchase agreement (SPA) for acquisition of 60 per cent equity stake
from HCC Concessions Limited in Dhule Palesnar Tollway Limited (DPTL). Post completion of
acquisition from HCC Group and transfer of holding by SEL, SIPL will become a 100 per cent owner of
Dhule Palasner Tollway Limited. However, the agreement is subject to fulfilment of certain conditions,
statutory and lender approval.
Mergers and Acquisitions
Chennai-based cloud solutions provider 8K Miles Software Services Limited has acquired
Cintel Systems Inc, a US-based mobile application development and services company. Under
the deal, the firm has entered into an asset purchase agreement that includes acquisition of Intellectual
Property (IP) and client contracts and transfer of employees for $3.75 million, in a combination of cash
and stock. Cintel offers UI design and UX development, mobile application development services for a
range of key verticals such as banking and financial services, insurance and healthcare, hi-tech,
education, retail and manufacturing. Its customers include SaaS and cloud applications providers.
Financial Results
Sify Technologies Limited has reported a 155 per cent increase in its net profits from Rs 40
million for the quarter ended March 2014 to Rs 102 million during the corresponding quarter in
2015. Meanwhile, its revenues increased by 36.5 per cent from Rs 2.63 billion to Rs 3.59 billion during
the same period. For the year ended March 2015, the company reported net profits of Rs 389 million, a
22.32 per cent increase from Rs 318 million for the year ended March 2014.
Miscellaneous
I Squared Capital, an infrastructure-focused investment firm, has raised $3 billion in a global
fund that will invest in assets across several markets, including India. The fund named 'ISQ Global
Infrastructure Fund', received strong response from the investors, with demand exceeding the $3 billion
legal cap. Limited partners include a diverse group of pension funds, sovereign wealth funds, insurance
companies, asset managers and family offices from the US, Canada, Europe, the Middle East, Asia and
Australia. The fund has so far made eight investments across 22 individual assets. Gibson, Dunn &
Crutcher LLP acted as fund counsel and Campbell Lutyens acted as a placement agent in respect of
the fundraising.Most recently, it agreed to acquire 100 per cent stake in Jaipur Mahua Tollway Private
Limited (JMTPL), a toll road that helps connect Jaipur with Agra, from Malaysia-based IJM Corporation
in December. The deal was valued at Rs 5.25 billion ($85 million).
Note: Rs 1 crore = Rs 0.01 billion; Rs 1 lakh = Rs 0.1 million; Rs 1,000 million = Rs 1 billion