Piramal Group Bats For Modiconomics
Piramal Group Bats For Modiconomics
Ajay Piramal's company is betting on the Modi wave for revitalizing the economy. Piramal Group is steadily aiming for a majority 51% stake in road projects across India. The acquisitions will be complete by the end of the fiscal year and they will cost around 50 billion in INR.
The company has signed term sheets for 4 projects while 2 others are in the pipeline. From the 6 targeted assets, 3 are in the south. SBI Cap and Piramal Enterprises Limited have signed an MoU for cooperation on business related opportunities in the acquisition of controlling stakes in road projects under PPP (public private partnership).
Under the MoU, SBI Cap and Piramal Enterprises Ltd have formed mutual agreement on engaging preferred relationship basis for advisory services for such identified road assets. SBI Cap will also provide assistance to Piramal Enterprises for necessary approvals regarding the close of such transactions.
Piramal Group's infrastructure investment plans are being led by former CEO of Gammon Infrastructure, Parvez Umrigar who currently heads the structured investment group.
The Piramal Group's flagship Piramal Enterprises have decided to acquire and manage road assets around 6 months ago after mezzanine financing to road projects and renewable energy ventures. Plans are also on to consolidate these under a separate management team.
Piramal Group has also invested in Hyderabad-based Navayuga Engineering Co and Green Infra. Around 200 projects with equity investments of INR 600 Bn are up for sale following liquidity problems by promoters. The aim is to infuse life into the stressed road sector for aiding highway developers for repairing their balance sheets.
Piramal Group has INR 3.3 Bn as per the annual report at the end of March 2014.the conglomerate is hunting for road projects for sale by stressed developers and it is betting heavily on the stimulation of growth and development and revive the infrastructure sector.
Piramal Enterprises Ltd sells drugs as well as financial services and it has identified 50 billion rupees or $837 million. So far, the road building programmes are facing massive roadblocks because of stalled projects. With strained public finances, private developers are expected to become involved in infrastructure. Competition for road assets is limited but demand is high from not only groups like Piramal, but also private equity funs such as Macquarie SBI Infrastructure Fund.
There is an increase in interest from strategic investors and financial investors for these sorts of assets, according to Sanjay Sethi, Head of Infrastructure Group at Kotak Investment Banking. The Piramal Group has evolved from a textiles manufacturer in the middle of the 1980s into a group with diverse interests such as real estate, pharma and glass. It will be interesting to watch how this conglomerate progresses in the field of infrastructure and roadways.
