3i India Infrastructure Fund, an investment fund set up by global private equity firm

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3i Group, has picked up a minority equity stake in KMC Infratech (KMCIL), a road projects subsidiary of the Hyderabad-based infrastructure firm KMC Constructions (KMCCL) for Rs 500 crore.

M. Goutham Reddy, director of KMCCL, said this is one of the largest investments in the Indian road sector, which enables the company to improve its pre-qualifications significantly. Refusing to quantify the equity stake offered to 3i India Infrastructure, he said, “It is a minority stake and is linked to performance.”

This is the fourth investment in Hyderabad-based companies for the $1.2 billion 3i India Infrastructure, which invests in power, road, ports and airports. It had earlier invested in Soma Enterprises, Krishnapatnam Port Company, GVK Energy and Adani Power.

KMCIL currently has some Rs 11,000 crore worth of 10 BOT (build, operate and transfer) road assets, of which three annuity and three toll-based road projects were set to start earning revenues from April, said Reddy. KMCCL is into EPC (engineering, procurement and construction) business, while KMCIL is into building BOT roads.

KMCIL plans to deploy majority of the equity funds infused by 3i India Infrastructure into the equity requirements of existing road projects and a portion for future road projects. “The fresh equity funds act as force multiplier for us and increases our pre-qualification threshold level to around Rs 3,000 crore from the current level of around Rs 2,000 crore,” said Reddy.

Anil Ahuja, managing director and head of 3i Asia, said, “KMCIL is well positioned to take advantage of the significant opportunity in the road sector in India. This investment allows us to partner with an infrastructure operator with a sound track record of constructing and operating road assets in the country.”

sukumarcr@mydigitalfc.com