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Exclusive: Essel Group mulls public issue for infra business

Subhash Chandra-promoted Essel Group is planning to take its infrastructure unit Essel Infraprojects Ltd public as a whole or divide it into segments as part of its strategy to create value, a top executive told VCCircle.

Four of the group’s listed firms—Zee Media Corporation, Zee Entertainment Enterprises, Dish TV and SITI Cable Network Ltd—are part of its flagship media business. Listed firm Zee Learn Ltd, which runs a chain of K-12 schools, is also a part of the group.

Listed multi system operator (MSO) SITI Cable Network Ltd, which was previously known as Wire and Wireless (India) Ltd, is also a part of the group.

The group now expects infrastructure to be the next business segment to go public. 

At present, the group has interests in media, industrial manufacturing, education and infrastructure. It is also charting out a game plan to become a financial services conglomerate. 

Essel Infraprojects Ltd has three strategic business units and six business verticals comprising an order book value $4.7 billion (close to Rs 31,490 crore) and a footprint in more than 17 states and across 100 cities, as per its website.

“Other than media and entertainment businesses, nothing is listed or in the public domain. So, on the infra vertical, we will look at going to the public market. It is at least one or two years away'', said Himanshu Mody who heads group finance and strategy for the group. 

The group ventured into the infrastructure space in 2007 by entering the surface transport segment. It now has presence in transport (roads), power transmission & distribution, urban infrastructure, environment (municipal solid waste), renewable energy (solar & hydro), integrated utilities (power, water, solid waste management and cable & broadband). 

“We keep working with bankers and advisors. Once we achieve the right size, which is attractive enough for investors, then we will start preparing for the public issue'', Mody said.

“Based on the order book, the business is split between road, transmission and solar. As every investor has a different investment profile, we will probably divide the company into separate segments for the public issue. We are speaking with advisors to understand the best way to do it,” he said.

“Investors are available for each of these sectors. In IPO, any good story will sell. There is strategic inbound interest as well. If the strategic partner brings something to the table that we lack, then we will (pursue such a deal). We wouldn’t bring a strategic partner just for financial investments,'' he said.

Infra acquisitions
In November, Essel acquired two build–operate–transfer (BOT) road assets from infrastructure development company KNR Constructions Ltd. The enterprise value of the two road assets – Patel KNR Infrastructure Ltd (PKIL) and Patel KNR Heavy Infrastructure Ltd (PKHIL) – is Rs 850 crore.

Essel Highways Ltd is the road holding company of the Essel Infraprojects. EHL has been evaluating profitable road assets for over 15 months. The existing portfolio of EHL includes around 15 road assets.

During the last financial year, a Goldman Sachs-led consortium committed to provide funds worth around $250 million to EHL for its expansion. The company is planning to acquire 10-12 more road assets before charting a listing plan. 

Two months back, Essel Highways was looking to raise Rs 400 crore ($60 million) from special situations fund Aion Capital Partners, a joint investment platform of Apollo Global and ICICI Venture. The funding is part of a Rs 1,480 crore ($220 million) fundraise through private placement of debt securities to finance new projects and strategic acquisitions.

According to a previous report by Mint, Essel Infraprojects is in advanced talks to buy a controlling stake in Hindustan Dorr-Oliver (HDO), a publicly traded unit of debt-laden infra developer IVRCL Ltd.

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