Last month the government introduced the Development Financial Institution (DFI) Bill in Lok Sabha to boost funding for infrastructure projects. The bill seeks to establish the National Bank for Financing Infrastructure and Development to support the development of long-term non-recourse infrastructure financing in India including development of the bonds and derivatives markets necessary for infrastructure financing and to carry on the business of financing infrastructure. The Government has already committed ₹20,000 crore as equity capital and ₹5,000 crore as grant for the institution.
The national asset monetization pipeline may set a target of Rs 3 trillion for states to monetize their assets over the next four to five years. States are being nudged by the Central Government and the NITI Aayog, and are being made aware of models they can use to monetize assets. They are toll-operate-transfer, operate-maintain-transfer, infrastructure (infra) investment trusts, and real estate investment trusts.
In the sector of roads and highways, The National Highways Authority of India (NHAI) approved the land acquisition policy based on value capture finance. Value Capture Finance or VCF is a type of public financing that recovers some or all of the value that public infrastructure generates for private landowners. The norms approved by the NHAI seek to devise a mechanism to implement VCF, jointly by the states and NHAI, to part finance the cost of highway construction in order to make them viable. The authority has allowed states to share the enhanced value of land in the project impact area for 1 km on either side of the greenfield/brownfield highway within the methods prescribed by the NHAI. The states may explore the possibility of development of residential/commercial real estate in the project impact zone for which connectivity to the main highway/service road may be given by NHAI.
National Highways Authority of India said that the Delhi-Mumbai Expressway Special Purpose Vehicle (SPV) has received ”AAA” rating from Crisil, CARE and India Ratings. The project, at an estimated cost of about Rs 90,000 crore, will connect Delhi to Mumbai on a Greenfield alignment under ”Bharatmala Pariyojna”. The project is being executed under 48 sub-projects, out of which 17 are Hybrid Annuity Model projects (Vadodara-Mumbai segment) and 31 are under EPC Model (Delhi-Vadodara segment). The total estimated cost of the greenfield project is about Rs 87,500 crore, including a land acquisition cost of about Rs 20,600 crore. Expenditure other than land acquisition during the construction period will be Rs 53,849 crore, to be funded through Rs 48,464 crore debt and equity of about Rs 5,385 crore from NHAI, with a debt-equity ratio marked at 9:1. The project is scheduled for completion by March 2023, with one of the stretches to Jawaharlal Nehru Port Trust (JNPT) getting completed by September 2023.
Union Minister Nitin Gadkari said the government is spending Rs 7 lakh crore (Rs 7 trillion) on building green express highways through modern technology which in turn would provide smart transportation and reduce pollution. Of these, Rs 1 lakh crore Delhi-Mumbai Expressway is likely to be completed within a year while Delhi-Meerut Expressway will be inaugurated in a month or two. He added that highway building has also achieved a new feat, with the construction touching a record 33 km per day.
Parliament was informed that the average toll collection through FASTag has reached Rs 100 crore daily. The government has made FASTags mandatory from February 15 midnight and any vehicle not fitted with it will be charged double the toll at electronic toll plazas across the country. The average daily fee collection through FASTag is more than Rupees 100 crores from 1st March 2021 to 16th March 2021.
A Parliamentary panel has expressed its displeasure over a whopping Rs 97,115 crore debt servicing liability on National Highways Authority of India (NHAI) and has asked the authority to explore restructuring of existing debt and look for options to raise long-term funds. The Department-related Parliamentary Standing Committee on Transport, Tourism and Culture, in its report tabled in Parliament also asked NHAI to prioritise the completion of its delayed road projects to prevent further cost escalation in such projects.
HCC Group’s infrastructure development arm HCC Concessions has received Rs 1,259 crore as it settled disputes for two projects with the National Highways Authority of India (NHAI). HCC’s Special Purpose Vehicles (SPVs) Baharampore-Farakka Highways and Farakka-Raiganj Highways entered into settlement agreements with NHAI for a comprehensive closure of all outstanding disputes and claims between the parties. The Baharampore-Farakka Highways project will receive Rs 405 crore, while Farakka-Raiganj Highways will get Rs 854 crore from NHAI. Farakka-Raiganj Highways will release the settlement proceeds and further sums to HCC Group, as a part of an existing contractual understanding with the asset’s buyer, Cube Highways & Infrastructure II Pte. Cube will release Rs 233 crore withheld as part of the deal, and will share a significant portion of the project’s revenue for the remainder of the concession’s 20 years. The closure of the dispute regarding the Baharampore Farakka Highways will facilitate the required liquidity in the project to accelerate completion of a much-delayed bypass. This will help HCC monetise this Rs 2,000 core-asset earlier than planned.
Alstom has bagged a contract from Mumbai Metropolitan Region Development Authority for design, manufacture, supply, test and commission of 234 metro cars, including personnel training for Line 4 and the extension corridor (Wadala-Kasarvardavali-Gaimukh). The order is valued at Rs. 1,854 crore. New products have been added to Alstom’s portfolio as part of the acquisition of Bombardier Transportation (BT) on January 29, 2021. The Line is a 35.3-kilometre-long elevated corridor with 32 stations. It will provide interconnectivity among the existing Eastern Express Roadway, Mono Rail, the ongoing Metro Line 2B (D N Nagar – Mandale), and the proposed Metro Line 5 (Thane – Kalyan), Metro Line 6 (Swami Samarth Nagar – Vikhroli).
In the sector of ports, Prime Minister Narendra Modi said that India will invest in more than 574 port projects identified under the Sagarmala at a cost of $82 billion (or Rs 6 trillion) by 2035, raise the share of clean renewable energy source in the maritime sector, develop waterways, augment seaplane services, boost tourism around lighthouses, and generate 2 million jobs. He urged global players to make India a “preferred investment destination”. In a bid to develop the 7,500-km coastline of India, the Ministry of Ports, Shipping and Waterways has drawn up a list of 400 projects with investment potential to the tune of $31 billion (or Rs 2.25 trillion) said Modi at the opening of a three-day Maritime India Summit, amidst the participation of 24 nations.
The Adani Ports and Special Economic Zones (APSEZ) Ltd., India’s largest private Ports & Logistics Company and a key subsidiary of the diversified Adani Group is acquiring 31.5% stake held by Windy Lakeside Investment Limited (an affiliate of Warburg Pincus) in Gangavaram Port Limited (GPL). The acquisition is valued at Rs. 1,954 crore and subject to regulatory approvals. It is the second largest non-major port in Andhra Pradesh with a 64 MMT capacity established under concession from Government of Andhra Pradesh (GoAP) that extends till 2059.
Apart from this, Windy Lakeside Investment Ltd will also invest Rs. 800 crore in Adani Ports and Special Economic Zone Ltd (APSEZ) for a 0.49 percent stake in the company. The Board of Directors of APSEZ took the decision to issue up to 10 million equity shares to Windy Lakeside Investment Ltd (Windy) at a price of Rs 800 each (at a premium of Rs 798 per Equity Share), for an aggregate consideration of up to Rs 800 crore, said APSEZ in the notice issued to the exchanges.
In the aviation sector, the government may float a request-for-proposal (RFP) for privatization of Air India in the next few days. The RFP is in the approval process and will soon be issued by the Department of Investment and Public Asset Management (DIPAM). It will give details on the current share of AI and AI Express in total bilateral rights, besides contingent liabilities due to retired employees. The treatment of liability of Rs 207 crore for wage arrears of employees working on narrow body fleet of the airline, will also be clarified. With the RFP, interested bidders will get access to documents that will help them in carrying out due diligence, after which financial bids will be invited.
Airports Authority of India (AAI) has decided to sell the 13 per cent stake it holds in Kempegowda International Airport Bengaluru (Bangalore International Airport, or BIAL) and GMR Hyderabad International Airport (GHIAL) to raise funds. The authority will soon appoint a transaction advisor to conduct a valuation of AAI’s stake in the two airports in which Prem Watsa-owned Fairfax Group and Delhi-based GMR Infrastructure (GMR Infra) hold the largest stake. The monetisation is planned under the government’s national asset monetisation pipeline through which the Budget has envisaged to earn Rs 2.5 trillion. The government-owned airport operator — one of the rare profit-making public sector enterprises in the civil aviation sector — is likely to post a loss of over Rs 1,000 crore in FY21. The first time it will be in the red since inception.
The domestic airport sector is expected to incur a net loss of Rs 5,400 crore, and cash loss of Rs 3,500 crore in FY21, impacted by a 66 per cent year-on-year slip in passenger traffic amid COVID-19 induced travel restrictions, rating agency ICRA said in a note. According to the agency, domestic passenger traffic may drop by 61 per cent, while the international passenger traffic will nose dive by 85 per cent in 2020-21. The industry, however, could see its profitability improving to Rs 190 crore backed by an expected massive 130 per cent year-on-year recovery in traffic in the next fiscal year.
In real estate sector, housing sales are estimated to rise 29 per cent year-on-year during January-March at 58,290 units across seven major cities (Mumbai, Pune, Kolkata, Hyderabad, Chennai, Bengaluru and Delhi) as demand recovered on low home loan interest rates and stamp duty cut by Maharashtra government, according to property consultant Anarock. It said 58,290 homes are estimated to be sold in the top 7 cities in Q1 2021 in comparison to 45,200 units in Q1 2020. Unsold inventory in the top seven cities saw a nominal yearly decline – from 6.44 lakh units towards the end of Q1 2020 to approximately 6.42 lakh units by the end of Q1 2021. Average property prices in the top seven cities saw some movement in Q1 2021, with most cities recording a rise of 1-2 per cent over Q1 2020 – except Kolkata where prices remained stagnant.
Realty firm Vatika has sold land worth Rs 450 crore and completed properties of about Rs 500 crore to repay its debt. Gurugram-based Vatika Group and its associated companies have retired debt worth Rs 1,109 crore within a period of 11 months. Vatika said it has repaid Rs 304 crore to Piramal Enterprises, Rs 108 crore to HDFC Ltd, Rs 519 crore to Indiabulls, Rs 82 crore to ICICI Bank and Rs 74 crore to Standard Chartered Bank.
Property brokerage firm PropTiger said housing sales in Chennai is likely to increase by at least 30 per cent this year, while prices may rise by up to 5 per cent on the revival of demand for residential properties because of lower interest rates and economic recovery. The new housing supply will also rise this year in Chennai and the average rate of new properties in Chennai stood at ₹5,228 per sq ft at the end of 2020.
Real estate player Embassy Group and Ivanhoe Cambridge, a subsidiary of Canada’s institutional fund managers CDPQ, have partnered to launch a $500-million investment fund focused on office business parks. While the Embassy Group will lead all real estate development, project management, leasing and operations, Ivanhoe Cambridge will leverage their expertise in investment. The Canadian partner and Embassy will be investing in an 80:20 ratio, with an initial focus on the southern Indian markets of Bengaluru and Chennai. The platform will invest in the development and acquisition of partially developed business park opportunities to cater to the preferences of the millennial workforce in providing flexible workplaces and building sustainable communities across key urban centres. The seed asset for the platform will be the first phase of the 60-acre Embassy East Business Park in Bengaluru. The first phase will be developed on a land parcel of 9 acres, with a gross leasable area of 1.3 million square feet having co-living, essential retail and amenities. The first phase of the project is expected to be ready for occupancy by early 2024.
Property fund management arms of Indiabulls, Motilal Oswal, and others are launching schemes and funds to lend construction finance to real estate developers. Indiabulls Asset Management Company Ltd is in talks with global investors to float a joint venture (JV) to lend construction finance to developers. Recently, Motilal Oswal Real Estate launched its fifth fund called IREF V with a target of Rs 7,800 crore, which will focus on construction finance to developers. Motilal intends to invest this fund in post approval projects through senior secured lending across the country’s top seven cities.
Indiabulls Housing Finance has raised USD 150 million (Rs 1,091 crore) by issuing foreign currency convertible bonds. The securities issuance committee has approved the allotment of secured Foreign Currency Convertible Bonds (FCCBs) of USD 150 million, convertible into equity share of Rs 2 each. The FCCBs, set to mature on March 4, 2026, bear a coupon rate of 4.5 per cent. The bonds are proposed to be listed on Singapore Exchange Securities Trading Ltd.
According to Housing.com, investment in prop-tech companies rose marginally to record $551 million in 2020 from $549 million in 2019 amidst a surge in adoption of virtual platforms for real estate marketing during the COVID-19 pandemic. In its report titled ‘PropTech: The Future of Real Estate in India,’ realty portal Housing.com said $2.4 billion has been invested so far in India’s prop-tech industry across 225 deals.
Realty firm Godrej Properties Ltd has raised Rs 3,750 crore through the largest qualified institutional placement (QIP) of shares by a real estate company in India. The company will use the money to buy land and expand business. Singapore’s GIC invested $110 million and Invesco Developing Markets Fund and other funds managed by Invesco Advisers, Inc., put in $150 million. Godrej raised Rs 2100 crore in 2019 through QIP of shares and Rs 1,000 crore through non-convertible debentures last year for buying land. The company has built a portfolio of 50 million sq ft in 30 months and plans 12 projects in the fourth quarter of current financial year.
Indian born Canadian billionaire Prem Watsa-owned Fairfax India is planning to list Anchorage Infrastructure, its flagship investment vehicle for airports and other infrastructure investments in India. Meanwhile, Fairfax controlled Bangalore International Airport (BIAL) to invest around $2.2 billion to create infrastructure to handle around 90 million passengers by 2034. Its chairman Prem Watsa said that since its inception in June 2019, Anchorage has actively participated in bidding for Indian airports’ and railway stations’ privatisation processes. He added, in March 2021, Fairfax India expects to close the transaction whereby it will transfer 43.6 per cent out of the 54% that it owns in BIAL to Anchorage and will sell 11.5 per cent of Anchorage for cash consideration of $130 million.
Prestige Estates Projects will take over a Mumbai housing project from bankrupt Ariisto Developers following a court decision. The Bengaluru-based developer plans to launch the first phase of the project by May and second phase toward the end of the year. Revenues of more than Rs 100 billion ($1.4 billion) from the 7.5 million square feet under development is estimated. Under the resolution plan, Prestige will pay Rs 370 crore upfront to creditors and allot them some 800,000 square feet of fully constructed area. Creditors include HDFC, Piramal Group, IIFL and other wealthy individuals and homebuyers.
Financial services groups, such as Indiabulls and Edelweiss, are looking to launch alternative investment funds (AIFs) to advance loans to property developers. This comes after they sold developer loans to investors to de-risk their books and generate funds after the liquidity crunch in the non-banking financial sector (NBFC) following IL&FS defaults.
Realty firm DLF raised Rs 500 crore through the issue of non-convertible debentures (NCD) to investors. DLF informed that the allotment committee has allotted 5000 senior, secured rated listed redeemable non-convertible debentures (NCDs) with a face value of Rs 10 lakh each. The tenure of the NCDs is three years and the coupon rate is 8.25 per cent. The NCDs will be listed on the BSE. Last week, a finance committee of the board of directors gave the approval to raise up to Rs 500 crore through the issue of NCDs on a private placement basis in one or more tranches to certain eligible investors.
In the Private Equity sector, Edelweiss Wealth Management has launched a private equity (PE) fund to tap pre-IPO and late-stage investment opportunities with a targeted corpus of Rs 5,000 crore. The fund is a third in the series themed Edelweiss Crossover Opportunities, which has so far raised Rs 2,200 crore. The money will be raised from domestic institutions and high-net worth individuals (HNIs) and the fund would be closed in six to twelve months. Edelweiss is looking at areas such as consumer internet, financial technology, affordable housing, etc. to invest. The allocation on the upper end can be up to 15 per cent in late-stage PE deals and will be relatively lower in close-to-IPO investments. The late-stage PE space has of late gained momentum in India.
Private equity fund, Leapfrog Investments, has received a commitment of $500 million from Temasek, an investment company owned by the Government of Singapore, to anchor all its future funds. Leapfrog, which is currently investing out of its $750 million fourth fund that it raised in 2018, has so far received close to $1.5 billion across its all funds. Apart from coming in as their LP, Temasek has also purchased a minority stake in the seven-partner fund and will hold a non-executive board seat.
Five Star Business Finance has raised $234 million in primary and secondary capital and has been valued at $1.4 billion, up from $950 million in July 2019, making it India’s fourth unicorn in 2021. The round included primary capital and a secondary sale of shares by Morgan Stanley Private Equity. Existing investor Sequoia Capital led the round, investing about $130 million, with Norwest Venture Partners also doubling down. New investors include private equity giant KKR, which invested about $70 million, and TVS Capital.
Global investors such as the Canada Pension Plan Investment Board (CPPIB), Ontario Teachers’ Pension Plan, Baring Private Equity (PE) Asia, and Värde Partners are flocking to Indian private debt because they expect huge demand for credit in the country after the onslaught of the Covid-19 pandemic and limited lending by Indian banks and non-banking financial companies (NBFCs). These have committed over $1 billion in Indian private credit, revealed industry estimates.
In the telecom sector, Reliance Jio, Bharti Airtel, and Vodafone Idea made upfront payments for the spectrum bought in the recently concluded auctions. It is learnt that while Reliance Jio has made a payment of Rs 15,019 crore, Bharti Airtel and Vi paid Rs 6,323 crore and Rs 574 crore, respectively. Reliance Jio emerged the highest bidder in the 4G telecom spectrum auction, beating incumbents Bharti Airtel and Vodafone Idea by a wide margin. The Centre would get Rs 77,815 crore from the two-day auction — one of the shortest in a decade. While the amount has exceeded the government expectation, the total mop-up is far below the Rs 3.92 trillion worth of airwaves put up for sale. The spectrum has been sold across a few preferred bands at the base price. Of the available spectrum of 2308 megahertz, 855.60 megahertz was sold in the auctions. Thirty-seven per cent of spectrum by quantity and 19 per cent by value were sold.
According to Ravi Shankar Prasad, union minister for communications, electronics and information technology and law and justice, the government is working to provide optical fibre connection to 650,000 villages. Further, he added that the country was kept going by the information technology (IT) mobile infrastructure during the lockdown. Addressing a question on the National Broadband Mission (NBM), in the Lok Sabha, Prasad said that it is envisaged that the expenditure of the government through the Universal Service Obligation Fund (USOF) is likely to be Rs 700 billion under NBM. The mission envisages covering all districts/states of the country including all districts of Bihar and Uttar Pradesh
In the Infrastructure sector, the government has taken various steps like monetizing assets, establishing DFI, approving land acquisition policies, etc. to uplift its funding process and implement projects at large scales. The government also continues to be expediting its process towards privatizing big public enterprises like Air India. It is also observed that many foreign private equity funders are planning to invest in India in areas like housing, digital infrastructure, financial technology, etc. Furthermore, sectors like real estate, roads and highways have also seen major hikes in investments last month.