Subhash Chandra’s Essel Group expects to raise over ₹20,000 crore by selling its infrastructure business, comprising roads, power transmission and solar energy assets. While ₹14,000 crore will be used to settle the infrastructure unit’s debt, the rest will be used to complete group projects and cut promoter debt.
The group has managed to buy time till September to conclude deleveraging exercise before lenders move to declare it a defaulter. Essel Infraprojects has already finalised the sale of four transmission assets to Edelweiss-backed Sekura Energy Ltd for ₹ 6,000 crore. While regulatory approval for one of the assets has already been received, the entire deal is expected to be concluded by March.
The company is also at the final stage of closing a deal for its renewable business, comprising 23 solar assets with total capacity of 658 MW. It expects to get ₹6,000 crore from this divestment. “There are at least three suitors; the talks are still on and will likely conclude before March,” a person close to the talks said. He added that most of the solar assets were commissioned in the last 1-2 years, leaving them with almost the full duration of the PPA. “Given that the average tariff is ₹5.40 per unit, the assets have significant value,” he said.
UK-based PE fund Actis LLP, Tata Power and Greenko Group have been in talks with Essel Infraprojects, according to industry sources.
The largest divestment planned by Essel Infraprojects is in the roads segment. The company has put six of its 14 projects up for sale, including two State highways and four NHAI projects, and is aiming to raise ₹11,000-12,000 crore.
The company has already received non-binding offers for the road assets and will start due diligence of suitors next week, the source close to the process told BusinessLine. The company expects to close the deal by September.
“These three divestments put together will reduce the infra debt of around ₹14,000 crore to almost nil. The total asset value will be around ₹22,000 crore so excess cash of ₹8,000 crore will go to the promoter, this will be required to complete projects and also will be used to reduce promoter debt,” the person said.
He added that the remaining infrastructure assets, including six road projects, a 11.5-MW waste-to-energy plant in Jabalpur and several water treatment projects would also be divested at different stages.
The company has decided to exit the infrastructure space completely, the source said.
Two market analysts, who did not wish to be named, believe valuation could be a challenge in the case of Essel Infra’s solar and road asset sale given that both sectors are in a consolidation phase with many assets currently up for sale.