Kotak special fund gears up for 700 yen deal

The alternative investment arm of Kotak Investment Advisors Ltd will deploy half of its $ 1 billion fund as it prepares to close its eighth deal, first for a road asset, worth around ??700 crore ($ 101.5 million).

Kotak Special Situations Fund will pay lenders to take a controlling stake in troubled HKR Roadways Ltd, a person familiar with the matter said.

The Telangana-based special-purpose vehicle is owned by Gayatri Highways Ltd, DLF and Associates, listed on the stock exchange, and Megha Engineering and Infrastructure Ltd.

In addition to the Kotak fund, HKR Roadways will also pay lenders ??50 crore, the person said. The agreement is part of a single settlement of approximately ??750 crore (revised from ??800 crore last year) offered by promoters of the seven lenders of HKR Roadways run 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.

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The total payment of ??750 crore means 50% haircut for lenders, said the person cited above. Apart from the deal, the Kotak fund may invest funds in HKR Roadways for capital expenditure and maintenance.

“The deal was supposed to be done by March, but was delayed due to issues with land acquisition and a bridge around the road. It should be closed within a week or two, ”the person said.

Investment could recover within two to three years. After the deal, Gayatri Highways will own 26% of HKR Roadways, the source said.

Last week, the company announced that it would buy about 49% of the road capital to facilitate the “conversion of debt into cumulative redeemable preferred shares on terms of financing by the Kotak fund.”

The fund, launched in February 2019, received $ 500 million from the Abu Dhabi Investment Authority. It reached its final close in August 2019 at $ 1 billion ( ??7,130 crores).

The fund focuses on special situations, credit and distressed spaces in India. In January 2020, he made his first deal.

In March 2021, the fund completed two transactions investing in payment solutions provider AGS Transact Technologies and specialty chemicals company DCW.

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