Tuesday, July 27, 2021
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Kotak Fund set to acquire its first road asset


Kotak Special Situations Fund (KSSF) the $1 billion investor in distressed assets is close to taking control in Telengana based HKR Roadways a special purpose vehicle (SPV) building the 207 kms Hyderabad-Karimnagar-Ramagundan highway.

Hyderabad-based

Ltd controls a majority stake in the company which will be taken over by KSSF, two people familiar with the deal said.

“KSSF is taking control of the project by settling the dues of this company through a one-time settlement. The deal is likely to be completed before the end of this month. Banks are taking about a 50% haircut in this deal,” one of the two persons cited above said. KSSF did not reply to an email seeking comment.

HKR Roadways had signed an agreement for four laning of the highway under the public-private partnership under which it was granted a concession period for 25 years including 2.5 years of construction period. The project started collecting toll from June 1 2014.

“A part of the project is completed and toll is being collected but there are some issues with regards to land acquisition and a bridge over a river which has delayed full completion. The settlement by Kotak will help this project get up and running,” said a second person cited above.

Total debt owed by the company is about Rs 1500 crore and Kotak is settling by paying about Rs 750 crore. Gayatri Highways will remain a shareholder in the SPV but the majority stake will be with Kotak.

This the KSSF’s first deal in the roads sector. Last month im an interview to ET Srini Sriniwasan, MD of the $4.7 billion Kotak Investment Advisors (KIA) under with the $1 billion fund is managed, said it plans to launch a $800 million infrastructure fund which will invest in projects across India. KSSF expects to complete 75% of its investments by December 2021, Sriniwasan had said.



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