Sri City to raise $50 mn from PE

Sri City, south India’s largest private special economic zone (SEZ), is planning to raise around $50 million (Rs 220 crore) from private equity (PE) investors for its proposed infrastructure development.

The SEZ, located at Tada in Nellore district of Andhra Pradesh, is coming up on 6,000 acres of land and will be developed over the next 8-10 years.

Speaking to Business Standard, Ravindra Sannareddy, managing director, Sri City SEZ, said the company was investing Rs 1,200 crore to develop infrastructure under Phase I. Of this, Rs 500 crore had already been invested for laying roads, creating water facilities and power connections. The remaining Rs 700 crore would be invested over the next two years.

“While the debt and equity portion will be around Rs 500 crore, the balance Rs 200 crore will be through internal accruals,” he said.

The company has already received investments worth Rs 320 crore from four private equity players including US-based Ocgziff PE Fund, Credit Asia Capital, Bedrock LLC, US, and Chintala Party Holdings.

“We have initiated talks with a new set of PE players to raise another $50 million,” he added.

Reddy said the SEZ was eyeing around Rs 10,000 crore worth of exports in the next two years apart from attracting investments worth Rs 6,000 crore by the end of Phase I.

Currently, ten companies have set up their units, which are up and running. Another 20 companies are in the process of setting up their units, which are likely to go on stream in the next 12 months.

The Chennai-based company is looking at sectors including engineering, auto/auto components, renewable energy, textile, agriculture, electronics, IT/BPO and leather among others.

The company is also getting ready to create social infrastructure, which would involve around Rs 2,500 crore. “This will be done through a joint venture model,” he said.

To begin with, Sri City has tied up with Euro schools to set up three residential schools with each school involving an investment of around Rs 80 crore. Similarly, it has tied up with Front Line Hospitals to set up a hospital and is scouting for a partner to develop a township, which would cost Rs 1,500 crore.

It is also planning to develop 50,000 houses, which would go up to 100,000, along with a promoter. The project includes affordable housing, luxury and villas. “We are also considering an 18-hole golf course,” said Reddy. The SEZ will also have a three-star hotel and a shopping complex. “We will provide land, while the money will be brought in by the partner,” said Reddy.