The Banking and Strategy Initiative

Chillin' out till it needs to be funded

Indian Infrastructure:: Limited Seats, Pay up or Fly

IDFC Private Equity, India’s largest infrastructure focused private equity fund, is getting equity shares in the publicly listed GMR Infrastructure Ltd through a share swap. The board of infrastructure major has approved issue of preferential shares to IDFC Infrastructure Fund – India Development Fund, the firm said in a filing to Bombay Stock Exchange.

When contacted by VCCircle, Raja Parthasarathy, MD at IDFC PE, said that the shares being allotted are in respect to shareholding previously held in Delhi International Airport Pvt Ltd (DIAL). DIAL is a subsidiary of GMR Infrastructure.

The share swap will provide IDFC PE with greater liquidity as GMR Infra is listed. Even though stock markets have somewhat revived, opening of primary markets is still a little far away. This has blocked private equity exits through the IPO window.

The move is similar to the one IDFC PE used to exit GMR Energy. IDFC PE swapped its 15% stake in GMR Energy, Another GMR Group firm, for a little more than 4% stake in GMR Infra in 2006.

GMR Infra, along with Frankfurt airport operator Fraport AG, Malaysia Airports Holdings Bhd and IDFC PE had won the bid for DIAL in 2006. IDFC PE had picked up an 8% stake in the airport at the time of bidding.

DIAL has recently faced trouble raising funds for the continued modernisation of Delhi airport. Then the government had allowed DIAL to implement airport development fee on passengers, helping it meet the funding gap.

Completely Exits Gujarat State Petronet

IDFC PE has also completely exited state-run gas distribution firm Gujarat State Petronet Ltd (GSPL). The fund has sold its last 1.9% stake in the company for a total sum of between Rs 40-42 crore through open markets on BSE and NSE.

The fund had invested Rs 90 crore in GSPL in late 2004 for a little more than 20% stake. The stake got diluted as GSPL roped in more investors and also went for an IPO in 2006 after which IDFC PE’s stake went down to 13.28%.


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