Kotak fund acquires 74% stake in HKR Roadways for Rs 715 crore

A special fund managed by the Kotak Investment Advisors (KIAL) on Wednesday said it has acquired a majority stake in a road asset in Telangana for Rs 715 crore.
 
“Kotak Special Situations Fund (KSSF) – managed by KIAL – said it has acquired 74 per cent stake in HKR Roadways (HKR), and funded the debt in the company for a one-time settlement (OTS) with existing lenders for Rs 715 crore. This successful funding and resolution of debt is the first one in the road sector for KSSF.”
 
Post settlement of dues, HKR will no longer be a non-performing asset (NPA) account.
 
HKR is a special purpose vehicle (SPV), owned by a consortium led by the Gayatri Group. It was awarded a 25-year concession by the Andhra Pradesh Road Development Corporation (now under the Telangana government).
 
The four-lane toll highway project of the existing Hyderabad- Karimnagar-Ramagundam section of State Highway One (SH1) was under design, build, finance, operate and transfer mode.
 
The 207 km toll highway project commenced operations from June 2014 but got delayed due to multiple reasons, including delays in the right of way and significant underperformance of traffic vis-a-vis initial estimates. The account became an NPA with all lenders.

 
The existing consortium of lenders to HKR sanctioned an OTS of all dues, subject to a Swiss Challenge Auction (where companies approach the government on their own).
 
Eshwar Karra, chief executive officer (CEO) of KSSF, KIAL, said, “Acquiring controlling stake in stressed assets like HKR is in line with our overall strategy of settling lenders in full cash against their dues and taking over such projects. HKR requires additional capex to achieve commercial operation deadlines, and we expect a turn-around in the next few years. KSSF will continue to offer full cash settlement, a much better option than non-cash options. It is fully geared to fund pre-packaged solutions under IBC, as and when the rules are notified.”
 
KSSF is an alternative investment fund managed by the Alternate Asset Management Company - Kotak Investment Advisors. KSSF currently manages a $1 billion fund with a mandate to invest in special situations, credit and distressed space in India.