Infrastructure India completes logistics merger

The London-listed India-focused fund manager has completed a deal that combines portfolio company VLMS and fellow Indian logistics business Freightstar.

Infrastructure India's portfolio company Vikram Logistics and Maritime Services (VLMS) has completed the acquisition of Freightstar, the logistics division of ETA Engineering. The deal was first announced in October last year.

Freightstar's assets include: an Indian Railways licence to operate container trains nationally, 11 operating container trains, land and a partially constructed terminal facility at Nagpur in Maharashtra, plus 46 acres of land for a proposed terminal facility at Palwal in Haryana.

The importance of the deal to Infrastructure India is indicated by the fact that VLMS currently represents around 52 percent of the London-listed manager's current net asset value (NAV). In a note, Investec said it expected the deal to be “accretive” to Infrastructure India's NAV, which has been trading at a significant discount.

In an interview with Infrastructure Investor in the March 2013 issue, Infrastructure India chief executive Sonny Lulla said the combined business will “be one of the largest private logistics businesses in the country”.

He added: “We will then have a well capitalised business which can grow market share. There's so much we can do. There are not many similar facilities in the market with the services we can offer.”

VLMS said it expects the terminal facilities of the combined entity to be fully completed between July and the end of 2013.

However, Infrastructure India also announced some less good news. Another portfolio company, hydropower business SMHPCL, is facing delays in raising incremental equity to complete remaining project area rehabilitation and construction works “in the wake of the difficult financing environment that exists in India”.

Infrastructure India boosted its coffers with a fundraising worth around $64 million in the third quarter of last year.