Anil Ambani-led Reliance Infrastructure on Wednesday said it plans to sell its cement business and monetise 11 road projects worth Rs 8,800 crore.
The company’s board on Wednesday approved a strategic review of the businesses, which also suggested making defence sector the primary driver of growth for Reliance Infrastructure.
Elaborating on the sale process, Reliance Infra said that its 5.8-MTPA cement business and related assets will be disposed off through a formal process.
“The company has shortlisted seven potential buyers from a total of 15 parties that submitted preliminary expressions of interest. The due diligence process has been commenced. Further announcements will be made at the appropriate stage,” a company statement said.
While the company did not specify further on the cement sale process, industry analysts said that an enterprise valuation for Reliance Infrastructure’s cement business is pegged at Rs 5,500-6,000 crore.
Apart from focusing on defence, the review will also help the company pare down its debt, which totalled Rs 25,766 crore at the end of March 31, 2015.
The company has mandated Morgan Stanley and State Bank of India Capital Markets to find buyers.
On the roads project, it said that plans are afoot to monetise an investment of Rs 8,800 crore made by the company. A formal process has been initiated in this regard as well and “significant interest” has been seen from strategic and portfolio institutional investors in India and overseas.
Reliance Infrastructure’s roads business comprises 11 revenue-generating projects of approximately 1,000 kilometres across seven states.
The Board also reviewed the progress on the proposed acquisition of Pipavav Defence & Offshore Engineering, as defence is a high-growth opportunity for the company. The sector has the potential for superior returns, the company said.
The review announcement, which came during the market hours, saw shares of Reliance Infrastructure end 1.9% high at Rs 399.05 on the Bombay Stock Exchange.