Infrastructure EPC company Dilip Buildcon Ltd (DBL) is set to divest its stake in two under-construction power transmission and renewable energy projects to Alpha Alternatives Fund Advisors LLP as part of a transaction valued at approximately ₹8,400 crore.
The company’s board approved the transaction on August 10, with the deal structured through a combination of cash and units.
The assets involved are Mekhali Power Transmission and DBL Renewable, covering power transmission and solar infrastructure.
Alpha Alternatives to Invest Alongside DBL
Under the proposed arrangement, Alpha Alternatives will not only acquire a stake in the projects but will also co-invest with DBL during the construction phase.
According to DBL Strategy Head Rohan Suryavanshi, Alpha Alternatives is expected to take on approximately 49% of the equity requirement for the two projects.
This will reduce the amount of capital that DBL’s parent balance sheet needs to commit towards developing the assets.
“The compensation will be paid partly in cash and partly in units. The detailed breakup will be disclosed upon completion of the transaction,” Suryavanshi said during the company’s Q1 earnings concall.
Asset-Light Strategy
The transaction is part of DBL’s broader strategy to move towards an asset-light, multi-asset development platform.
By bringing in a financial partner during the construction phase and monetising its stake, the company aims to unlock value from its infrastructure assets while generating capital that can be reinvested into new projects.
The strategy is also expected to support DBL’s efforts to reduce debt and strengthen its balance sheet.
The company said the transaction further strengthens its existing long-term relationship with Alpha Alternatives.
Focus on Capital Recycling
DBL has increasingly been looking at ways to recycle capital from its infrastructure portfolio instead of retaining assets throughout their entire operating life.
The company believes that monetising completed or under-development assets can provide additional capital for pursuing new infrastructure opportunities while reducing the pressure on its balance sheet.
The power transmission and renewable energy transaction therefore forms part of a wider shift in DBL’s approach towards developing infrastructure assets and subsequently bringing in investors.
InvIT Options Being Explored
Apart from the power and solar assets, DBL is also evaluating Infrastructure Investment Trust (InvIT) structures for its water and oil & gas assets.
According to Suryavanshi, these potential structures would allow the company to expand its capital-recycling strategy beyond its traditional road and power infrastructure portfolio.
The move could provide DBL with additional avenues to unlock value from its infrastructure assets, strengthen liquidity and deploy capital into new projects.
Overall, the proposed transaction with Alpha Alternatives marks another step in DBL’s strategy to reduce capital intensity, deleverage its balance sheet and build recurring cash flows through a diversified infrastructure asset platform.
Author
About the Author
