GMR sets ball rolling for its asset-light strategy

GMR's debt stands at about Rs 35,000 cr, with a gearing of about 2.5

GMR Infrastructure, the Bangalore-based, publicly held infrastructure developer, is understood to have set the ball rolling for its stated ‘asset-light’ strategy, which it has been trying to put in place since early this year.

According to information available, the company is considering three steps to kick off the process — first, total exit from a Canada-based company that has coal mines in South Africa. Second, look at merging two coal mining companies in Indonesia (in which it holds stakes), and subsequently, hold about 35 per cent stake in the merged entity. Third, look at diluting 70 per cent stake in a gas-based power project in Singapore. Cumulatively, these steps, when implemented, could fetch GMR Infrastructure about $500 million.

GMR’s debt stands at about Rs 35,000 crore, with a gearing of about 2.5 times. To cut debt, the company has been considering various options such as offloading stakes in a host of highway projects.

Senior management officials told Business Standard while the process of considering options to divest stake in the South African miner was underway, the company was also evaluating options to create value in the Indonesian mines. An official spokesperson, however, denied any such move in the near future.

GMR Infrastructure holds 55 per cent stake in Canada-based Homeland Energy Group, which has coal reserves of about 350 million tonnes in South Africa. It is understood GMR is looking at an enterprise valuation of $120 million for this asset. In 2008, the company had acquired majority stake in Homeland Energy, which is also a significant shareholder in Homeland Uranium, a Canadian exploration and development entity for coal, focused on projects in Niger and America.

GMR Infra also has majority stake in two coal mines in Indonesia, on which it had invested about $600 million. While one has reserves of about 100 million tonnes, another, Golden Energy Mines, has about 900 million tonnes of reserves.

For its 30 per cent stake in Golden Energy Mines, GMR had paid about $450 million.

Among other options, GMR is considering merging these two companies and, subsequently, holding 30-35 per cent stake in the merged entity.

It is also understood the company has seen immense interest in its 70 per cent stake in Island Power, an 800-Mw, gas-based power project in Singapore. At the end of last year, GMR had offloaded 30 per cent stake in the company in favour of Malaysian major Petronas for about $35 million.

Earlier, GMR had sold 50 per cent stake in US-based power producer Intergen for about $900 million. It had sold the stake to China’s Huaneng, stating it would focus on projects in India.