Friday, September 24, 2010

3i’s infra fund may invest Rs 684 crore in Soma Enterprises’ road business

MUMBAI: Global private equity firm 3i Group is likely to invest $150 million (approximately Rs 684 crore) in the road business of Hyderabad-based construction and engineering company Soma Enterprises (Maganti Ankineedu CEO), said a person familiar with the matter.

London-based 3i’s infrastructure fund will invest a large part of the money in Soma Enterprises’ yet-to-be-formed holding company for road business. The remaining part will be put in various road projects, said the same person who did not wish to be named. “The structure of the proposed investment will help the promoters of Soma to avoid much dilution,” said the person.

3i’s representative in London said they would not comment on market speculation. “We are currently in talks with a few players for drawing investments in our roads business. But nothing has been finalised and any finality on the deal will be known only in a couple of months,” said Ankineedu Maganti, CEO and promoter of Soma Enterprises.

3i had bought a minority stake in Soma Enterprises for Rs 400 crore two years ago. 3i has invested 42% of its $1.2-billion India dedicated fund till last year, according to its annual report for the year ended December 2009.

Unlisted Soma Enterprises plans to get its shares listed with the stock exchanges next financial year, said Mr Maganti. It recorded a net profit of Rs 161 crore and sales of Rs 2,500 crore last year.

Soma needs funds for expansion as it intends to participate in National Highways Authority of India’s 558-km, six-lane road project between Kishangarh and Udaipur Highway.

This project is estimated to cost Rs 5,000 crore. The existing road portfolio of Soma is estimated to be Rs 12,000 crore with financial closure achieved for a majority of its road projects. It has a 50:50 joint venture partnership with Spanish infrastructure firm Isolux Corsan for some of the road projects.
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