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Highway to success

The case:
IDFC Projects and PLUS Expressways Berhad (PLUS) have been working together on road projects in India for over 15 months. The IP - PLUS JV has submitted RFQs for three projects and are exploring opportunities to bid jointly for future projects in India. In one of the meetings held with the PLUS top management, IDFC Projects was told of PLUS' desire to scout for acquisition opportunities with companies in the Indian Build Operate and Transfer (BOT) road space.

The challenge:
Since PLUS was a new entrant in the Indian space it was difficult for them to zero-in on the right company to buy a stake. The company also needed help from an Indian company to acquire highway projects and advise them on proposed acquisitions.

IDFC's ‘one firm’ solution:
IDFC Projects appraised PLUS about the credentials of IDFC Capital and set up preliminary meetings between IDFC Capital and PLUS teams. IDFC Capital then helped PLUS in acquiring a highway project and successfully closed the deal.

Following this, PLUS mandated IDFC Capital Limited to advise them on their proposed acquisition of equity in Indu Navayuga Infra Project Pvt. Ltd. (INIPPL). The investment banking team was responsible for the detailed evaluation of INIPPL that consisted of assessing the target’s business plan and financial model, coordinating traffic, legal and accounting due diligence with various agencies, structuring the transaction to mitigate various risks and negotiating the price, transaction structure and key covenants in the transaction documents on behalf of PLUS with the existing shareholders of INIPPL.

During the course of the transaction, the investment banking team made presentations to PLUS and its Board on valuations, transaction structure and negotiation strategy in order to provide them with the right perspective in evaluating the transaction and facilitate the decision making. The transaction documents were signed in January 2010.

This was an example of how IDFC's two verticals were able to help a company not only set up operations in India but also make an acquisition and win orders in the infrastructure space.

How it worked at IDFC

  • IDFC Projects: Appraised PLUS about IDFC Capital's credentials and set up preliminary meetings between them
  • IDFC Capital: Helped PLUS in acquiring a highway project and successfully closed the deal. It also advised and evaluated a proposed acquisition of equity in Indu Navayuga Infra Project Pvt. Ltd. (INIPPL).

 

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