BackSrei Infrastructure Finance plans to sell non-core ventures
Srei is looking to sell its stake in at least two ventures, Bharat Road Network, and Sahaj e-Village
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Kolkata: Srei Infrastructure Finance Ltd is looking to sell its portfolio of non-core businesses to fund its expansion plans.
The Kolkata-based non-banking financial company (NBFC) in April sold its 18.5% stake in telecom tower operator Viom Networks Ltd to American Tower Corp. for ₹ 2,931 crore.
It had invested ₹ 1,598 crore in the venture.
Srei is now exploring ways to cash in on more such investments in diverse assets, such as roads, power, water, rural infrastructure, industrial parks and special economic zones. Its core business, however, is to finance infrastructure development.
Srei is looking to sell its stake in at least two ventures, Bharat Road Network Ltd and Sahaj e-Village, according to Hemant Kanoria, chairman and managing director of Srei Infrastructure and Finance Ltd.
Both are on growth trajectories similar to Viom and have the potential to attract investments, Kanoria said.
With an investment of around ₹ 100 crore, Sahaj has built Internet-based rural connectivity in 25 states to carry out financial and other transactions.
It has started to recover operating costs, according to Sameer Dalal, head of research at Natwarlal and Sons Stockbrokers Pvt. Ltd.
Srei’s own investment in the venture is estimated at ₹ 11 crore in equity, but its stake in it is unknown. It has, however, made loans in exces of ₹ 250 crore to the company.
While Sahaj was earlier used to deliver public services, companies have started to use it to sell consumer goods and financial products in rural markets.
Kanoria said Srei is looking to bring in strategic investors in Sahaj. But according to Dalal, it might be a little too early from the valuation standpoint to seek investments into the firm.
In Bharat Road, which builds and operates highways on the so-called BOT (build-operate-transfer) basis, Kanoria is looking to raise ₹ 750- ₹ 1,500 crore through a stake sale. This, Dalal said, could also include an initial public offering (IPO) of shares. He declined to specify a time frame for the stake sale.
Bharat Road has executed 14 road projects. Srei has significant economic interest in eight of them; five such roads are already operational and have turned in a total revenue of at least ₹ 272 crore in nine months till December 2015, Srei had said in an investor presentation.
Srei had invested ₹ 307 crore in its road assets, the presentation said.
Kanoria said that if offered the right valuation, Srei could cede control of these assets to investors. But Dalal is sceptical about the chances of Srei getting a decent valuation because of the glut in such investment opportunities. “There are too many people in the market looking to sell road assets," he said. “There are more sellers than buyers."
Two other institutional analysts, who did not wish to be identified, said Srei’s plans to sell stake in these ventures are in line with what it has done previously with other assets, but one of them said finding takers for its road assets won’t be easy.
Srei has ambitious expansion plans and is looking to generate cash to back them, these analysts said, but its stake sale plans could take time to materialise.
Kanoria said that Srei isn’t in a rush to raise cash from these investments and will wait for the right opportunity and valuation.
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