Shares of Hindustan Construction Company (HCC) ended 9% higher on Wednesday after the construction and engineering company completed the sale of its subsidiary Baharampore-Farakka Highways (BFHL) to Cube Highways and Infrastructure V Pte ltd. The transaction value of the deal was ₹1,323 crore, which includes Special Purpose Vehicle (SPV) debt of ₹646 crore.
Backed by Squared Capital and Abu Dhabi Investment Authority, Cube Highways is a Singapore-based company investing in road and highway projects, along with select other infrastructure sectors in India.
“This is to inform you that consequent upon transfer of 100% stake held in Baharampore-Farakka Highways Ltd. (BFHL), by HCC Concessions Ltd., a wholly owned subsidiary of the Company, BFHL has ceased to be subsidiary of the company with effect from March 28, 2023,” HCC said in a BSE filing today.
The company informed the exchange that the binding term sheet for sale of stake was executed on February 1, 2022, and the share purchase agreement was completed on February 15, 2023. The shares were transferred on March 28, 2023.
As per the deal, HCC will receive a total of ₹941 crore which includes upfront amount of ₹677 crore and ₹264 crore payable by December quarter of this year and June quarter of financial year 2024-25 in two tranches.
Besides, HCC will be entitled to a revenue share from BFHL over the entire concession period, which is material in nature.
Incorporated in March 2010, Baharampore-Farakka Highways Ltd (BFHL) is a SPV of HCC Concessions for Design, Build, Finance, Operate & Transfer (DBFOT) Toll of the 4-lane highway between Baharampore and Farakka section of NH-12 (earlier NH-34) in the state of West Bengal under NHDP Phase Ill. NHAI has granted a concession period of 25 years (extending to 30 years) to the company and BFHL commenced commercial (toll) operations on May 14, 2014.
Arjun Dhawan, Vice Chairman, HCC said "HCC is proud to have developed the backbone of West Bengal's arterial highway on NH-12. Our concessions portfolio has been a value generator for the group and this asset sale underscores the material liquidity contribution toward our operations and growth."
The legal and financial advisors for this transaction were Cyril Amarchand Mangaldas and Edelweiss Financial Services, respectively.
Following the announcement, HCC shares gained as much as 10.1% to hit an intraday high of ₹14.06 against the previous closing price of ₹12.77 on the BSE. The stock finally ended at 8.85% higher at ₹13.90, while the market capitalisation climbed to ₹2,103.11 crore. The smallcap stock saw surge in buying activities as 48.17 lakh shares changed hands over the counter compared with the two-week average volume of 37.55 lakh stocks.
At the current level, HCC shares trade 39% lower than its 52-week high of ₹22.70 touched on December 22, 2022. It hit a 52-week low of ₹10.54 on June 20, 2022. The stock has fallen 14.6% in a year, while it has lost nearly 35% in the calendar year 2023. In the last one month, the counter has shed 4%, while it dropped 4.5% in a week.