Roads developer Ashoka Buildcon (ABL), through its city gas distribution (CGD) business, Unison Enviro (UEPL), is planning to bid for projects worth Rs 400-600 crore in the next round of bidding scheduled in February
Roads developer Ashoka Buildcon (ABL), through its city gas distribution (CGD) business, Unison Enviro (UEPL), is planning to bid for projects worth Rs 400-600 crore in the next round of bidding scheduled in February.
A day after ABL said it has received Rs 150 crore from Morgan Stanley in exchange for a 49% stake in UEPL, Paresh Mehta, CFO, ABL, told FE the Wall Street giant would invest more funds as and when required in order to bid for new projects and set up the required infrastructure. “We will also put in funds so as to maintain our holding of 51% in UEPL. The idea is to grow this business together with Morgan Stanley, over time,” Mehta said.
UEPL has already set up three fueling stations for CNG for vehicles and plans to add to this tally over the next few years, Mehta added. UEPL will also set up pumping stations to supply piped natural gas to both commercial and domestic consumers.
According to analysts at Edelweiss, with corresponding equity infusion in line with their respective stakes, UEPL currently has a war chest of `300 crore, which is enough not only to fund its existing projects, but also to grow its portfolio by winning new ones.
While ABL’s foray into CGD has been a deviation from its core engineering and toll roads business, analysts believe the partnership with a reputed investor such as Morgan Stanley will assuage these concerns and that it would reduce ABL’s own equity commitment. They added that while equity infusion in the business is not a concern anymore, the deal is the first step towards growing the business and eventually, unlocking value.
On Tuesday, the stock closed up 3.5% at Rs 131.70 on the BSE.
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