Kotak Special Fund readies for ₹700-cr deal
MUMBAI: The alternative investment arm of Kotak Investment Advisors Ltd will deploy half its $1 billion fund as it prepares to seal its eighth deal, first for a road asset, worth about ₹700 crore ($101.5 million).
Kotak Special Situations Fund will pay lenders to take a majority stake in stressed HKR Roadways Ltd, a person with knowledge of the matter said.
The Telangana-based special purpose vehicle is owned by publicly listed Gayatri Highways Ltd, DLF and associates, and Megha Engineering and Infrastructure Ltd.
In addition to the Kotak fund, HKR Roadways will also pay lenders ₹50 crore, the person said. The deal is part of a one-time settlement of around ₹750 crore (revised from ₹800 crore last year) proposed by promoters to HKR Roadways’ seven lenders led by Canara Bank, the person added.
The other lenders are Punjab National Bank, Union Bank of India, Indian Overseas Bank, India Infrastructure Finance Company, Indian Bank and Bank of Baroda.
The total payout of ₹750 crore means a haircut of 50% for the lenders, the person cited above, said. Outside of the deal, the Kotak fund may invest funds in HKR Roadways for capex and maintenance.
“The deal was expected to be completed by March but got delayed due to issues relating to land acquisition and a bridge around the road. It should be closed within the next week or two,” said the person.
The investment could see a turnaround within two to three years. After the deal, Gayatri Highways will hold 26% of HKR Roadways, the source said.
Last week, the firm said it would buy about 49% stake in the road asset to facilitate the “conversion of debt into cumulative redeemable preference shares as per the terms of funding by the Kotak fund”.
The fund, launched in February 2019, received $500 million from Abu Dhabi Investment Authority. It hit its final close in August 2019 at $1 billion (₹7,130 crore).
The fund focuses on special situations, credit and distressed spaces in India. In January 2020, it struck its debut deal.
In March 2021, the fund closed two deals by investing in payment solutions provider AGS Transact Technologies and speciality chemicals firm DCW.