Shapoorji Pallonji in largest infra refinancing deal in India

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Shapoorji Pallonji in largest infra refinancing deal in India

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Shapoorji Pallonji has raised Rs26.1 billion (US$402.6 million) through a bond market solution to refinance its Jammu - Udhampur highway concession in India.

The bonds, at an average price of 9.15%, have various maturities starting December 2015 and ending Deccember 2030. According to the firm, the deal is among the largest private sector infrastructure bonds issued in India and is the largest bond in the roads sector.

Shapoorji Pallonji released in a statement:

"Proceeds of the bond were used to refinance the Issuer's existing foreign currency and rupee loans, helping the company to lower its cost of debt and importantly eliminate exchange rate risk of the foreign currency debt."

Sujata Guhathakurta, head of debt capital markets, Kotak Mahindra Bank (one of the arrangers), commented:

"The deal delivers great value to both the issuer and the investors. We believe that the debt capital markets can provide significant amount of takeout financing to banks for financing infrastructure projects, which are of upmost importance to our country. Kotak has been at the forefront of this initiative, having been one of the first to structure an NHAI Annuity-backed bond in 2010 and now having completed the largest NHAI bond issuance."

The project was developed by the company through a special purpose vehicle (SPV), SP Jammu Udhampur Highway Ltd. It involved the rehabilitation, strengthening of four laning from Jammu to Udhampur section from Km. 15.00 (Jammu Bypass) to Km.67.000 of NH-1A in the state of Jammu & Kashmir and its improvement, operation and maintenance through a concession on design, build, finance operate and transfer (DBFOT) on BOT basis. 

The Concession Agreement (CA) was signed on July 19, 2010 and the concession was granted to the firm for a period of 20 years from the appointed date (June 17, 2011). The concession period included a 3-year construction period. Afcons Infrastructure Limited (an SP group company) was the EPC contractor for the project

The total project investment was Rs24 billion (US$370.2 million), of them Rs21.6 billion (US$333.2 million) was financed by domestic bank debt and external commercial borrowings.

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