Brookfield Asset Management in talks with KMC Constructions for $400-$500 mn road asset buyout

Two years after sealing one of the largest asset sales in the Indian infrastructure space with the billion dollar buyout of nine projects from Gammon India, Canadian alternative asset manager Brookfield Asset Management is now in advanced talks for its second major domestic acquisition in the sector, three independent sources familiar with ongoing negotiations told ET NOW on the condition of anonymity. ” Brookfield Asset Management has signed a term-sheet with KMC Constructions for a proposed buyout of four road assets of the latter’s portfolio. Due diligence has begun on the deal and the ticket size of the potential transaction could be between $400 mn to $ 500 mn, though the valuations might change at a later stage” said one of the three sources cited above. ET NOW was the first to report the deal talks. Hyderabad headquartered KMC Constructions has bid and won 9 projects aggregating to lane kms of 3,800kms under its management, according to the company website. Its list of BOT projects include Guruvayoor Infrastructure Pvt Ltd, Pinkcity Expressway Pvt Ltd, East Hyderabad Expressway Pvt. Ltd, Brindavan Infra Co Ltd, OB Infrastructure Ltd., Rayalseema Expressway Ltd, Thrissur Expressway Ltd & Simhapuri Expressway Ltd. ” In terms of strategic rationale for all stakeholders, there are multiple aspects to this deal. London headquartered private equity group 3i Group which is an existing investor in the company is eyeing an exit through this deal. The deal proceeds will also help to pay off L&T Finance which had earlier provided structured finance of around Rs 250 crores for the company’s road projects. And finally, the deal will help to reduce the debt of the company at the parent level,” added the second source. In 2011, 3i group had pumped in Rs 500 crores in KMC’s subsidiary, KMC Infratech Ltd back in 2011. Other investors in KMC Constructions include Sequoia Capital and IDFC, according to the company website. In response to email queries from ET NOW, a 3i group spokesperson declined to comment on speculation regarding the firms portfolio companies. ET NOW is awaiting email responses from Brookfield Asset Management, KMC Constructions & L&T Finance.
Source: ET