Reliance Infra to monetise road assets; shortlists bidders for cement unit

By Debjyoti Roy

  • 04 Nov 2015
Credit: Courtesy: Reliance Infrastructure Ltd

Anil Ambani-controlled Reliance Infrastructure Ltd is looking to sell stake in its road projects and has shortlisted seven bidders for selling its cement business as the firm retunes its focus on its defence sector business, it said on Wednesday.

The firm said it has initiated a formal process for monetising its roads related assets and has attracted significant interest from strategic and portfolio institutional investors in India and overseas. The firm did not name the suitors nor gave any timeline for selling stake in the projects.

It has invested Rs 8,800 crore in the business, which includes 11 revenue generating projects across seven states.

Meanwhile, the firm shared that it has shortlisted seven potential buyers to sell its cement business as part of plans to cut debt through sale of non-core assets. The company has cement production capacity of 5.8 million tonnes per annum and given the recent deals in the sector it could fetch an enterprise valuation of around Rs 5,700 crore.

In August, Birla Corp struck a deal to buy two units from Lafarge India at a valuation of Rs 5,000 crore.

Reliance Infrastructure said as many as 15 firms had submitted preliminary Expressions of Interest. It added that due diligence process has been commenced for the final sale process.

These proposed asset sales are meant to reduce focus on non-core business activities a the firm is now banking on the country’s defence sector as the primary driver of future growth.

The company, while highlighting its future plans in a stock market disclosure, said that the sector has significant business opportunities due to its relatively lower capital intensity, lower gestation period and minimal regulatory uncertainties.

Earlier this year, Reliance Infra had pipped several other business groups including Munjals of Hero and Mahindras to ink a deal with Nikhil Gandhi-promoted SKIL to buy management control of Pipavav Defence & Offshore Engineering Co. Ltd. The final transaction awaits some pending regulatory clearances.