IDFC, Malay fund to form JV for roads

Infrastructure Development Finance Company (IDFC) and Khazanah, investment holding arm of the Malaysian government, will form a joint venture company to develop road projects in India.

Khazanah will hold 80.1 per cent stake in the proposed JV and IDFC the balance. Both would also invest in convertible instruments issued by the JV, said IDFC in a communication to the stock exchanges on Friday.

As its first initiative, the JV will invest in Jetpur Somnath Tollways Ltd (JSTL). JSTL is involved in four-laning of the Jetpur-Somnath stretch of National Highway-8D in Gujarat.

At present, IDFC Projects Ltd, subsidiary of IDFC, holds 74 per cent stake in the JSTL. Initially, IDFC-Khazanah JV will acquire 48 per cent of the share capital of JSTL from IDFCPL and later raise holding to 74 per cent.

According to information on the website of Khazanah, it has stake in more than 50 companies, with assets valued in excess of $35 billion. It also has stake in PLUS Expressways Berhad, which has partnered with IDFC for roads projects.

IDFC has decided wrap up its loss-making projects development business, which it entered in 2007. It will come out of existing projects step by step, by diluting stakes and booking profits. Currently, IDFC Projects has investments in two projects, a Rs 5,000-crore power one in Chhattisgarh and a Rs 1,000-crore road project in Gujarat.

In both, IDFC Projects owns 74 per cent stake. It had also bid jointly with PLUS Expressways for the Indore-Dewas highway project. The consortium has been short-listed for the project.

IDFC stock was down 2.27 per cent to Rs 135.35 at close of trading session on the Bombay Stock Exchange.