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Welspun exploring investment from Canadian investment fund in road projects: Report

Welspun Enterprises has been scouting for investors for its existing road projects while looking to acquire projects struggling due to funding and other issues.

November 20, 2020 / 11:27 AM IST

Welspun Enterprises is in talks with a Canadian pension fund for investment in nine road project assets worth Rs 12,000 crore, sources told the Hindu BusinessLine.

Seven of these nine projects, worth Rs 10,000 crore are being built on the hybrid annuity model (HAM), as per the report.

Moneycontrol could not independently verify the report.

Welspun’s HAM projects are Aunta-Simaria (Bihar), Chikhali-Tarod (Tamil Nadu), Chutmalpur-Ganeshpur (Uttar Pradesh), Delhi-Meerut Expressway, Gagalheri-Saharanpur-Yamunanagar (UP-Haryana border), Roorkee-Chutmalpur-Gagalheri (Uttarakhand) and Sattanathapuram-Nagapattinam (TN). Another is the ongoing build operate transfer (BOT) model project Mukarba Chowk-Panipat (Haryana, worth Rs 2,122 crore).

A spokesperson for Welspun refused to comment, as per the report.

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The company has been scouting for investors for its existing road projects, while looking to acquire projects struggling due to funding and other issues. With HAM, it follows an “asset-light model” and, once it acquires projects, it starts receiving annuity payments from the National Highway Authority of India (NHAI) or concerned government agency, the report noted.

HAM allows companies to build and maintain road stretches for long tenure. Firms receive 40 percent of the implementation cost in advance and the rest in bi-annual payments. Toll in such projects is collected by the concerned authorities.

In BOT, companies build, operate and collect toll for the project over long tenures. The risk is exposure to a particular project and possible extension time-wise in making back the profit.

Canadian funds have been keen on infrastructure projects in India – in 2019 Caisse de dépôt et placement du Québec (CDPQ) acquired seven road projects from Global Infrastructure Partners; while Canadian Pension Plan Investment Board (CPPIB) has investments in L&T IDPL, stake in IndInfravit Trust and has agreed to buy nine operational road projects worth Rs 6,610 crore from Sadbhav Infrastructure Project.
Moneycontrol News
first published: Nov 20, 2020 11:27 am
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