Kotak Special Situations Fund (KSSF) on Tuesday said it has acquired a 74 per cent stake in HKR Roadways, a non-performing asset for banks, for Rs 715 crore. The consideration paid for HKR, a special purpose vehicle owned by a consortium led by the Gayatri Group, also includes a one-time settlement for funding the debt with all the lenders, KSSF said in a statement.
The USD 1 billion KSSF is managed by Kotak Investment Advisors, which focuses on alternate assets business, and this funding and resolution of debt is the fund’s first bet on the road sector.
“Acquiring controlling stake in stressed assets like HKR is in line with our overall strategy of settling lenders in full cash against their dues and taking over such projects,” KSSF chief executive Eshwar Karra said.
He said the company requires additional capex to achieve commercial operation date (COD), and it expects a turnaround in the next few years.
HKR was awarded a 25-year concession for a four-lane toll highway project of the existing Hyderabad Karimnagar Ramagundan section of State Highway One (SH1) under Design, Build, Finance, Operate and Transfer basis by the then Andhra Pradesh government.
The 207 km toll highway project commenced operations from June 2014, but due to delays in the right of way and significant underperformance of traffic vis-a-vis initial estimates, the account became a non-performing asset (NPA) with all lenders.
The existing consortium of lenders to HKR has sanctioned a one-time settlement of all the dues, subject to a Swiss Challenge Auction. Post settlement of dues, HKR will no longer be an NPA account, the KSSF statement said.
Spelling out the fund’s strategy for the future, Karra said KSSF will continue to offer a full cash settlement, which he said is a much better option than non-cash options and is fully geared to fund pre-packaged solutions under IBC (Insolvency and Bankruptcy Code), as and when the rules are notified.
