IL&FS Transportation Networks Limited (ITNL) has signed a definitive agreement with Macquarie’s Asian infra fund (MAIF) for the sale of a 15% stake in Gujarat Road and Infrastructure Company Limited (GRICL).

Under the terms of the agreement MAIF will pay a total consideration of Rs1.098 million (US$16.3 million). The entire consideration will be received upon receipt of necessary approval and fulfillment of certain conditions precedent

Upon closure of the deal, MAIF will hold 56.8% of the equity capital of GRICL whereby the ITNL will cease to have management control of GRICL but will continue to hold equity shares representing 26.8% of the paid up equity share capital of GRICL.

GRICL was promoted by ITNL (41.80%), MAIF (41.80%) and Government of Gujarat (16.39%) for strengthening and four-laning of 31.7 km long Vadodara-Halol and 51.6 km long Ahmedabad-Mehsana stretches. These were the first set of state road highway projects developed in the country on build, own, operate and transfer (BOOT) model.

The total project cost was Rs5148.8 million (US$76.52 million) which was funded through Rs2,970 million of debt and Rs.2178.8 million of equity. The Vadodara Halol stretch commenced operations from October 24, 2000 while Ahmedabad Mehsana achieved COD on February 20, 2003.

Although the concession period is for 30 years, it is not fixed.  As per the concession agreement, in the event the project cost and the designated return are not recovered at the end of 30 years, the concession period will be extended by two years at a time until the project cost and the return thereon is recovered. At current recovery rate, the concession period could get extended beyond 2040.