PE firm Xander acquires stake in HCC arm for Rs240 crore

US-based private equity firm, The Xander Group, yesterday acquired a 14.5-per cent stake in HCC Concessions Ltd, a wholly-owned subsidiary of infrastructure company Hindustan Construction Co. Ltd (HCC), for Rs240 crore.

The deal values Mumbai-based HCC Concessions, which designs, finances, builds and operates transport infrastructure, at Rs1,650 crore ($375 million).

The announcement of the investment came on the same day HCC reported a 90 per cent fall in June-quarter net profit, due to high interest rates and a slowdown in the infrastructure sector.

The builder of the 4.7km long Bandra-Worli Sealink said that the funds will be used at supporting the future growth of the business. HCC has a net debt of Rs3,772 crore as on 30 June 2011.
 
Presently, HCC Concessions' Rs5,500 crore ($1.2 billion) portfolio includes six NHAI ptrojects, which include one annuity project and five toll roads: Nirmal (annuity) in Andhra Pradesh, the Delhi Faridabad Elevated Expressway, Dhule-Maharashtra/MP Border (Dhule) on NH3 and three contiguous sections in West Bengal on NH34.

Commenting on the transaction, Ajit Gulabchand, chairman and managing director of HCC, said, ''The Indian Government has enhanced the pace of development of world class infrastructure for India through Public Private Partnership and HCC has chosen Xander, an investment group in which we find a wealth of expertise & commitment to complement our business goals. The deal reinforces faith in our robust asset portfolio and the growth potential for our concessions business.''

 ''As India continues to grow, it will need more world-class infrastructure, built by world-class companies. HCC is one such company and we believe its skills will help propel the country further into the 21st century. We are delighted to participate in the growth of its infrastructure business,'' said Arthur Segel, chairman of The Xander Group.

The Xander Group is a global investment firm focused on the infrastructure, hospitality, retail and real estate sectors. Since 2005 the firm has committed over  $1.8 billion of equity capital to the Indian market across five dedicated India funds.

In 2006, Xander Group had bought a 20-per cent stake in a joint venture between Reliance Industries and the Maker Group, to develop commercial, residential and retail real estate in Bandra Kurla Complex in Mumbai and the PE firm had joined hands with Tata Group in 2007 to launch a $650-million global fund specialising in institutional real estate.