IL&FS to list transport network arm, raise Rs 700cr

IL&FS wants to raise around Rs 700 crore by taking its surface transportation arm, IL&FS Transportation Network, to the bourses. Anumeet Kaur Bisen reports.

IL&FS Transport Network, India's largest private sector player engaged in the build-operate-transfer (BOT) model for roads and highways wants to raise Rs 700 crore. For this, it plans to list on the stock exchanges. The move will involve private equity fund Trinity Capital selling its entire 2.5% in the company.

Of the proceeds, Rs 500 crore will be used to repay part of the Rs 1,854 crore consolidated debt on its books.

The loans that will be paid off are: a Rs 100-crore short-term unsecured loan from Allahabad Bank, Rs 100 crore unsecured loan from Canara Bank, Rs 100 crore from group company IL&FS Securities Services. And two loans of Rs 100 crore rupees each from United Bank of India.

Paying off this debt will serve two purposes. One, it will bring the company's debt-equity ratio down from the current 1.9. Two, it will improve its debt leveraging capacity and provide better opportunity for funding future projects.

The issue is expected to hit the markets by late 2009 or early 2010. The company says it may also go in for a pre-IPO placement exercise.

Some of the proceeds may also be used to expand low-margin overseas operations. That's because its overseas operations under Spanish arm Elsamex provides ITNL with the bulk of its revenues.

However, there is a question over the company's revenue generation capacity. Considering Elsamex has been generating losses in the past and may continue to do so for a while yet.