IDFC Private Equity invests Rs 150 crore in GVR Infra Projects

BANGALORE: IDFC Private Equity , one of India's largest risk capital investors has put in Rs 150 crore to acquire a minority equity stake in Chennai based GVR Infra Projects Limited. GVR will use the funding for its projects in engineering and contracting space that includes the roads sector.

"We believe that the potential for growth in infrastructure is immense with lot more still to be achieved, " said GVR managing director K Ganga Prasad. Public infrastructure outlays will double over the next five years, to $1 trillion, with the private sector accounting for between 40 per cent and 50 per cent of the total, according to Bain & Company, a global management consulting firm that released the India PE Report in April this year.

Over the next five years, the construction industry alone will need an additional $150 billion to $200 billion to fund assets and working capital, according to the Bain report.

This is the third investment by IDFC Private Equity in the roads sector. Previously the firm which invests out of a total corpus of $ 1.3 billion, had invested in L&T Infrastructure Developers and Ashoka Buildcon. Over the last eight years it has made 33 investments. Some of these investments include deals in GMR Infrastructure, Gujarat State Petronet, Delhi International Airport,Manipal Global Education, Moser Baer Solar Limited and Viom Networks.

Some of the top exits for the fund include the exit through a private sale from L&T Infrastructure as well as the exit through an initial public offer listing of Ashoka Buildcon last year.

Civil engineer G Venkateswara Rao along with Ganga Prasad, an entrepreneur, together incorporated the company in 2001 as GVR's key promoters. The company clocked revenues of about Rs 1,000 crore in FY 2011 and has an order book of Rs 4,200 crore.

IDFC said they invested in the company because of the strong management team and order book position coupled with profitable growth over the years. " We are extremely positive on the roads sector as we expect strong order inflows at the national and state level," said S G Shyam Sundar, Partner at IDFC Private Equity.

"We also believe that sectors like railways and urban infrastructure where GVR has a presence will open up in a big way in the coming years," Sundar added. Some of the GVR portfolio projects include Hyderabad's Outer Ring Road project, Hubli-Lakshmeshwar (SH-73) in Karnataka and Bangalore-Hosur (NH-7) amongst several others.

In addition to roads, GVR is also executing projects in sectors such as urban infrastructure, railways and irrigation across eight Indian states. Alongside its core in-house engineering, procurement and construction business, GVR has a portfolio of five Build Operate Transfer projects.

Veda Corporate Advisors, a Chennai based investment bank was the sole advisor to GVR on this deal.