TIDMIIP
RNS Number : 5972L
Infrastructure India plc
06 September 2023
6 September 2023
Infrastructure India plc
("IIP" or the "Company" and, together with its subsidiaries, the
"Group")
DLI Transaction Update
Infrastructure India plc, an AIM quoted infrastructure fund
investing directly into assets in India, is pleased to announce the
conditional sale of the Group's interest in 99.99% of Distribution
Logistics Infrastructure Private Limited ("DLI" and, together with
its subsidiaries, the "DLI Group") to Pristine Malwa Logistics Park
Private Limited ("Pristine Malwa"). Pristine Malwa is a wholly
owned subsidiary of Pristine Logistics and Infraprojects Limited
("Pristine" and, along with all Pristine entities, together, the
"Pristine Group").
Transaction Summary
The DLI Group, along with IIP and Distribution and Logistics
Infrastructure India, Mauritius, IIP's wholly-owned subsidiary
("DLI Mauritius"), have entered into a conditional share purchase
and shareholders' agreement (the "Agreement") with the Pristine
Group and certain subsidiaries for the majority acquisition of DLI
by Pristine Malwa (the "Transaction"). The Pristine Group provides
end-to-end multi cargo logistics solutions, and services including
port handling, road and rail transport, warehousing, shipping,
stevedoring, customs handling, and integrated logistics in India
and Nepal.
The Transaction comprises a share swap and upfront cash
consideration, whereby DLI Mauritius, which owns a 99.99% interest
in DLI, will receive, in consideration for selling its entire
shareholding in DLI, a cash payment of approximately US$10 million
on closing, and up to 33% of Pristine Malwa's issued share capital
(the "Merged Group"). The final equity and cash consideration
payable to DLI Mauritius is subject to customary adjustments based
on the net current assets and indebtedness of DLI on the closing
date. The Agreement includes certain conditions precedent to be
satisfied by each of DLI Mauritius and Pristine Malwa prior to
closing of the Transaction, including consent of DLI India's
lenders, certain governmental approvals, mandatory regulatory and
tax filings, and certain limited operational processes. Pristine
Group requires the consent from the investment committee of their
majority shareholder, Global Infrastructure Partners, in order to
proceed with closing of the Transaction. The Transaction is also
subject to consent from the Group's lenders including GGIC, Ltd.,
Cedar Valley Financial and IIP Bridge Facility LLC.
DLI
DLI is a supply chain transportation and container
infrastructure company headquartered in Bangalore and Gurgaon with
a material presence in central, northern and southern India. DLI
provides a broad range of logistics services including rail
freight, trucking, handling, customs clearing and bonded
warehousing with terminals located in the strategic locations of
Nagpur, Bangalore, Palwal in the National Capital Region and
Chennai. DLI is the largest asset in the Group's portfolio. DLI was
valued at GBP176.2 million in IIP's unaudited interim results for
the period ended 30 September 2022, representing 88% of the Group's
portfolio at that date.
Pristine Malwa and Sical
Pristine Malwa is the parent company and c. 95% shareholder of
Sical Logistics Limited ("Sical"), a company listed on the India's
National Stock Exchange and the BSE (formerly named the Bombay
Stock Exchange). Pristine Malwa is also engaged in developing and
managing private freight terminals in India. Sical provides port
handling, road and rail transport, warehousing, shipping,
stevedoring, customs handling, trucking, retail logistics, mining,
and integrated logistics, with expertise in end-to-end bulk
commodity logistics including coal, iron and cement.
Further Information on the Transaction
Following closing of the Transaction, which is expected to occur
during Q4 of 2023, the Group shall become a substantial minority
shareholder of Pristine Malwa, which will be the holding company of
Sical and DLI.
Following the acquisition of DLI, the Pristine Group will own
and control the Merged Group and have a pan-India footprint,
connecting the rail freight across north, south and eastern India,
and would have a presence at all significant rail transport and
logistics hubs in India. The Merged Group would have the ability to
ship both containers and bulk commodities, expanding the scope of
the business.
Sical and DLI have significant synergies, complementary
locations and operational efficiencies, backed by the management
knowhow and railway infrastructure of the Pristine Group.
Completion of the Transaction would enable the Pristine Group,
together with Sical and DLI, to take advantage of several
macro-changes in the logistics industry, including:
-- A shift towards a multimodal freight system from a road-based
one, in line with India's goal to reduce logistics costs from 14.4%
of its GDP to 10%, and the mission of the Indian railway board to
ship 3,000 million tonnes by rail by 2027 (up from 1,418 million
tonnes in 2022).
-- Heavy investments in railways by the Indian Government,
expanding India's overburdened rail freight infrastructure and
establishing dedicated freight corridors.
The Transaction allows the Company to remain invested in the
Indian logistics sector through its substantial interest in the
Merged Group and realise better value for the Company's
shareholders at the time of exit, which is contemplated to be
within 24 to 36 months from the date of closing of the Transaction.
It also allows the Company to retain a significant indirect
interest in DLI, whilst also benefitting from asset diversification
through its significant indirect interest in Sical. In addition,
the Board expects that by DLI being part of a larger group, it will
benefit from economies of scale.
Following the closing of the Transaction, DLI Mauritius will
appoint a nominee director to the boards of Pristine Malwa and DLI
India. In addition, IIP will have customary minority protection
rights, such as operational inputs relating to business plans,
information parity rights, pre-emptive rights in respect of future
equity issuances, tag-along rights and change of control covenants
in relation to Pristine Malwa and its subsidiaries. Similarly, DLI
Mauritius' shareholding in Pristine Malwa shall be subject to
certain contractual and statutory transfer restrictions, right of
first refusal exercisable by Pristine Group and drag-along rights
applicable in limited circumstances. Each of Pristine Malwa and DLI
Mauritius will also provide customary indemnities to each other in
relation to the Transaction.
The Board believes that the Transaction presents an exciting
prospect for DLI with clear synergies and a business combination
with considerable reach and scale. Having considered the funding
options currently available to the Company and the immediate
funding needs of the Group, the Board believe that the Transaction
is in the best interests of the Company and its shareholders.
The Board looks forward to providing shareholders with further
updates, as appropriate, in due course.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 as it forms part of
United Kingdom domestic law by virtue of the European Union
(Withdrawal) Act 2018 (as amended).
- Ends -
Enquiries:
Infrastructure India plc www.iiplc.com
Sonny Lulla Via Novella
Strand Hanson Limited
Nominated Adviser
Richard Johnson / James Dance +44 (0) 20 7409 3494
Singer Capital Markets
Broker
James Maxwell - Corporate Finance
James Waterlow - Investment Fund Sales +44 (0) 20 7496 3000
Novella
Financial PR
Tim Robertson / Safia Colebrook +44 (0) 20 3151 7008
About the Pristine Group :
Pristine Group, headquartered in Delhi, is engaged in the
business of providing end-to-end multi-cargo logistics solutions
pivoted around rail terminals and is backed by Global
Infrastructure Partners and British International Investment.
The Pristine Group currently operates six Inland Container
Depots and Private Freight Terminals, with warehousing area of
approximately 905,000 square feet. Additional assets include
approximately 2,624 domestic standard containers and 395 dwarf
containers. Sical operates three container freight stations in
southern India, with capacity to handle more than 1.5 million TEUs
(20-foot equivalent unit cargo containers).
The Pristine Group has been expanding its presence in India
through acquisitions, in the course of which it acquired Sical and
has now agreed to acquire DLI.
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END
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