Essel Group is in talks with Cube Highways and Infrastructure and Caisse de dépôt et placement du Québec (CDPQ) to sell three of its toll roads. Essel Group was looking to sell six of its road assets. However, investors were interested in buying only three-four, which are toll roads while the others were annuity assets. Shares of Essel Group’s flagship company Zee Entertainment Enterprises Ltd (ZEEL) plunged in January after the company deferred a scheduled interest payment. Essel Group has been struggling to repay its debt obligations. If the deal materialises, it would be a significant reprieve for the group.
The assets are expected to fetch a combined enterprise value of ₹3,300-3,500 crore, said the first person cited above, requesting anonymity. “Essel is likely to formally announce the deal within the next three to four weeks. The entire proceeds of the sale will be used towards debt repayment.
The three projects comprise toll roads in Madhya Pradesh (Lebad-Jaora state highway), Karnataka (Navayuga Devanahalli Tollway near Bengaluru airport, a national highway) and Telangana (Essel Dichpally Tollway, a state highway).
With the term sheet signed, Essel will now have to get the clearances from the national and state authorities for transfer of ownership.
Essel Infra has 14 road projects in its portfolio, of which six are national highways and the rest state highways, according to the company’s website. The company had a debt of ₹11,466 crore as of December 2018.
A potential deal will offer an entry for CDPQ into India’s toll roads sector. The investor is currently building a team to manage the assets. Essel Infra has placed the bulk of its completed projects—including power transmission, roads and renewable energy assets—on the block to reduce debt. Last October, it announced that it would sell four power transmission lines—two operating and two under-construction—to Sekura, backed by the Edelweiss Infrastructure Yield Plus fund, for ₹6,000 crore.