Dilip Buildcon sells Rs 10,500cr road projects at 135% premium

In what could be the largest road assets sale in the country, infrastructure firm Dilip Buildcon has exited the toll-road sector with sale of 24 projects worth Rs 10,500 crore to the Shrem Group for Rs 1,600 crore.
The deal fetches a premium of close to 135 per cent for the Bhopal-based company's investment of Rs 682 crore.
However, it will continue to build under-construction projects on EPC basis, apart from operating and maintaining operational projects for a fee.
Bhopal-based Dilip Buildcon has signed a term sheet with Shrem Group to sell 100 per cent equity in 24 assets worth Rs 10,500 crore, comprising 14 operational assets, four under-construction projects and six assets under hybrid annuity model (HAM) in different stages of development.

The total length of 24 projects is 4,130.48 km. Barring one, all operational projects are in Madhya Pradesh, the other being in Gujarat. The other ten assets are across the country.
The city-based Shrem Group, set up in 2011 by brothers Nitan and Hitesh Chhatwal, is in realty, hospitality, healthcare and finance.

"The road sector has seen a handful of deals happening in the past few years, even though lots of players are looking to divest assets. In this scenario, our deal is historic and a game-changer for Dilip Buildcon," the company's strategy and planning head Rohan Suryavanshi told PTI.

Dilip Buildcon has so far invested Rs 681.99 crore in these 24 projects and the 10 under-construction projects need additional investment of Rs 841.6 crore to complete them.
"Our total investment in the form of equity and sub-debt as of end June is Rs 681.99 crore. These projects need additional Rs 841.61 crore investment against which company is expecting to receive a total of Rs 1,600 crore through this transaction," he said.
Asked how the company plans to utilise the proceeds, he said it would be used to repay debt at the consolidated basis and also strengthen the balancesheet. Dilip Buildcon has Rs 1,700 crore debt at consolidated level, and Suryavanshi said the company will retire the entire debt with the sale.

"Besides fresh equity, the company will also get rid of all the debt on the consolidated level, which will further strengthen our balancesheet. It will double the return on capital employed for us from its current levels," Suryavanshi added.