Gammon divests nine infra projects to Brookfield consortium

Major infrastructure developer Gammon Infrastructure Projects Ltd on Saturday said it has divested nine project firms to a consortium led by Canada-based Brookfield Asset Management and Core Infrastructure India Fund Ltd (CIIF).

Under an agreement signed on Thursday here, the consortium - BIF India Holdings Ltd - will take over the nine firms, which have six road projects and three power projects.

"Of the nine project firms, six are operational and one is being expanded while two are under development," Gammon said in a statement here.

The total cost of nine projects is estimated to be Rs.6,750 crore on completion, including Rs.2,935 crore for six operational projects and Rs.3,815 for three other projects.

Of the Rs.3,815 crore for three projects, Rs.3,097 crore has been capitalised till March 31 of fiscal 2014-15, while remaining debt for all projects is Rs.1,718 crore and Gammon's net exposure in the asset basket is Rs.415 crore.

"The government's policy changes in the infrastructure space have resulted in the revival of interest from marquee overseas investors like Brookfield in the Indian infrastructure sector," said the statement.

The over century-old Brookfield has a global portfolio of total assets under management of about $200 billion invested on behalf of its clients

Post-transaction, Gammon's consolidated debt burden will reduce to Rs.2,229 crore from Rs.3,947 crore.

"The transaction is not only the largest asset sale in the Indian infrastructure industry, but also reflects the improved sentiments of foreign investors owing to positive approach of the government in the infrastructure space," said Gammon chairman and managing director Abhijit Rajan.

Brookfield's managing partner Anuj Ranjan said the fund's first major investment in Indian infrastructure provided the company a platform to participate in the country's growth story over the long-term.

Gammon managing director Kishor Kumar Mohanty meanwhile said that the transaction "allows us to get capital released from completed projects and improve financial position to explore new opportunities in the infrastructure space arising out of government's new initiatives.