Infra Finance Update, July 2021

HDFC Ltd has got a loan of $250 million from International Finance Corporation (IFC), the investment arm of the World Bank Group, to be used by India’s largest housing finance company for green housing. Green housing is regarded as a luxury market in the country, but has climate benefits. IFC said its partnership with HDFC would help change perceptions about the market. At least 25 per cent of the funding is for green affordable housing. Green affordable housing can help India on its path to deliver on its commitments under the Paris Agreement, to reduce a third of its carbon emissions by 2030 from 2005 levels, said Renu Sud Karnad, Managing Director at HDFC Ltd.

As per NHAI, with the easing of lockdown in most states and rise in the traffic movement on the highways, toll collection in June 2021 increased to Rs 2,576.28 crore, 21 per cent higher than Rs 2,125.16 crore collected in May this year. National Highway Authority of India in a statement said toll collection across the country through FASTag touched Rs 103.54 crore, with 63.09 lakh transactions on July 1, 2021. Electronic toll collection through FASTag is operational at 780 active toll plazas across the country.

The National Highways Authority of India (NHAI) continues to accumulate debt at a fast clip.

The highway agency’s debt reached a new high of Rs 3.17 trillion at the end of FY21, up 27 per cent from Rs 2.49 trillion at the end of March 2020. In comparison, the highway toll revenues are estimated to have declined by 4 per cent last financial year to around Rs 26,000 crore, according to an analysis by ICRA Ratings.

The National Highways Authority of India (NHAI) has started re-engagement with investors for its infrastructure investment trust (InvIT), which has been delayed by over a year. The second wave of the pandemic led to a decline of 15-20 per cent in toll revenue in May, which picked up after the lockdown restrictions were eased in June.  The NHAI is planning to offer 19 projects, worth Rs 35,000 crore, under the InvIT model, which is a platform to monetise roads over the next three-five years. The initial bundle of road projects selected for the InvIT provides better prospects because they are part of national corridors. The trust is being set up as a private listed InvIT to attract large institutional investors. It is an investment trust that works like a mutual fund and is regulated by Sebi.

The evaluation of more highway stretches to be offered for the infrastructure investment trust (InvIT) this year is underway. The National Highways Authority of India (NHAI) plans to increase the share of these market instruments in its future monetisation plan. It is expected that the InvIT would overtake the toll-operate-transfer (TOT) projects as the preferred monetisation route for the authority during the current year. According to an official, a slew of projects is under consideration. A majority of these highways are expected to be monetised via the InvIT route, given a large volume of projects went earlier to TOT.

In digital infrastructure, Ascendas Property Fund Trustee Pte. Ltd., the Trustee-Manager of Ascendas India Trust (a-iTrust) said a-iTrust would invest ₹1,200 crore (S$216.6 million) to develop and operate phase one of its first data centre campus in India, at Navi Mumbai. The 6.6-acre greenfield site at Airoli will be developed in phases into a fully-fitted data centre campus with a total potential built-up area of up to 575,000 sq. ft and 90 MW of power to host customers such as global technology players and cloud service providers, as well as large domestic enterprise clients.

Telecom department’s apex body the Digital Communications Commission (DCC) has cleared a provision of using satellite connectivity in telecom networks to provide services in remote areas where it is difficult to lay optical fibre network. DCC (formerly the Telecom Commission) has also cleared the Request for Proposal for the rollout of BharatNet project for broadband services in villages in 16 states in public private partnership mode with viability gap funding of Rs 19,041 crore.

Brookfield Infrastructure, a subsidiary of Canada’s Brookfield, and Digital Realty, the global provider of data centres, announced the setting up of an equal joint venture to develop data centres in India. The JV will operate under the brand name BAM Digital Realty. The joint venture will expand Brookfield Infrastructure’s global data infrastructure portfolio, which currently includes $23 billion in assets across data transmission, distribution, storage, and a portfolio of 139,000 operational telecom wireless towers in the country. BAM Digital Realty plans to acquire land parcels in multiple Indian metros for the development of data center campuses to support the needs of global hyperscale service providers as well as international and local enterprises.

In the sector of private equity, global investment firm KKR will acquire Global Infrastructure Partners’ (GIP’s) entire interest in Highway Concessions One (HC1) and seven highway assets with a total length of 487 kms. This is KKR’s maiden investment in the transport sector in Asia. With this acquisition, it aims to strengthen and expand India’s National Highway network, which serves about 40 per cent of total traffic. However, it accounts for only 2 per cent of the country’s road network.  KKR made its investment from the KKR Asia Pacific Infrastructure Fund. This is KKR’s third investment in India from the Fund and its first in Asia’s transport sector.

Brookfield-backed Tower Infrastructure Trust has acquired Space Teleinfra Private Limited (STIPL), a indoor coverage solutions provider in India, for an equity deal of ₹900 crore. The transaction is funded through a combination of cash and units of Tower Infrastructure Investment Trusts (InvITs) that will be issued to selling shareholders. The acquisition is customary to regulatory approvals and is expected to close in the second half of 2021. Ambit Private Limited acted as the exclusive financial advisor to the Shareholders.

Online ride-hailing platform Ola announced that Temasek and Plum Wood Investment Ltd, an affiliate of Warburg Pincus, a global private equity fund focused on growth investing, are joining Ola founder Bhavish Aggarwal to invest $500 million (Rs 3,733.3 crore) ahead of Ola’s IPO, according to a company statement. This is amongst the largest investments in the Indian consumer internet space by these funds, as Ola continues to scale up across various categories and geographies in its ride hailing business.

In the sector of real estate, Residential sales in Q2 (April-June) 2021 increased by 83 per cent as compared to Q2 2020, across the top seven cities. By comparison, in Q1 2021, sales of residential units continued an upward trajectory, increasing by 17 per cent on a sequential basis. In the first wave of COVID-19, residential sales dropped by a record 61 per cent quarter-on-quarter to 10,753 units in Q2 2020. However, the impact of the second wave has been limited with sales in Q2 2021 dipping by 23 pc to 19,635 units.

Realty firm Hiranandani group is investing Rs 700 crore to develop a 2 million square feet office building at Thane, near Mumbai as part of its plan to expand its commercial real estate portfolio. In a statement, Hiranandani group said it is developing a total of 2.6 million square feet ”Hiranandani Business Park” in its township Hiranandani Estate, which is spread over 350 acres on Ghodbunder Road, Thane near Mumbai.

DLF Ltd, India’s largest real estate developer reported a net profit of Rs 337.17 crore in the June quarter, compared to a net loss of Rs 71.52 crore in the corresponding period a year ago when construction activities were limited due to the national lockdown, leading to almost no revenue recognition and poor operating cash flows. Its total income nearly doubled to Rs 1242.27 crore compared to Rs 646.98 crore during the same period. DLF said is it witnessing encouraging demand in the residential business. Under its rental arm DLF Cyber City Developers Ltd (DCCDL), the commercial office business has shown year-on-year growth while the shopping mall segment has been impacted again.

ASK Property Investment Advisors, the real estate private equity arm of the ASK group has announced the launch of a new real estate-focussed fund called ASK Real Estate Special Opportunities Fund – IV for which it is targeting a corpus of Rs. 1,000 crore and an additional Rs. 1,500 crore via a greenshoe option. The fund will identify projects of reputed developers and provide funding to ensure financial closure for seamless execution and timely completion. The fund is in line with ASK’s focus on affordable and mid-segment residential and mixed land-use projects. The fund will focus on job growth corridors across the top six cities of India (MMR, Delhi-NCR, Bengaluru, Chennai, Pune, and Hyderabad).

Tech-based mortgage finance startup Easy Finance had raised $15 million from a clutch of investors in its series A round. Easy, which secured a housing finance license in 2018, offers housing loans through its mobile application, and predominantly focuses on the middle- and lower-income group segment. Loans through Easy are typically Rs 15 lakh to Rs 50 lakh over 10-year-plus tenures.

Proptech startup Strata, which facilitates fractional ownership of commercial real estate, has raised $6 million (around ₹44.6 crore) from investors including Kotak Investment Advisors to expand its business and grow its assets under management. The firm is looking to spread its geographical footprint across key markets of Mumbai, Hyderabad, Chennai, Bengaluru, Delhi and Pune. It also plans to accelerate product development and introduce new investment offerings to yield greater returns for its investors in the long-term.

The Adani group has completed the acquisition of Mumbai International Airport Limited (MIAL) and will begin construction of the Greenfield airport in Navi Mumbai next month. Last August the group announced the acquisition of Mumbai airport from the GVK group. The transaction concluded today giving the Adanis 74 per cent stake in MIAL. Adani Airport Holdings Limited will also begin the construction of the Navi Mumbai International Airport next month and complete the financial closure in the next 90 days. This new international airport will be commissioned in 2024.  According to the Chairman of the Adani Group, the larger objective is to reinvent airports as ecosystems that drive local economic development and act as the nuclei around which catalyse aviation-linked businesses. These include metropolitan developments that span entertainment facilities, e-commerce and logistics capabilities, aviation dependent industries, smart city developments, and other innovative business concepts.

Picture courtesy: sigmarion/Flickr

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