The FIPB has put on hold Chennai-based rail infrastructure company Sical Infra Assets’ proposal to attract Rs 106 crore investment from PE firm Old Lane Mauritius.
The railways wanted the decision on hold since Sical has a concessionaire agreement with railways for operation of container trains and the deal is valid for 20 years. The ministry is of the view that proposal of transfer of shares and induction of foreign equity has to be examined in light of existing concession pact.
The ministry of shipping has also supported the stand adopted by railways officials at a recent meeting of the FIPB. Therefore, the Board decided to take it up again later. Sical Infra Assets, a Chennai-based public limited company, is engaged in developing, implementing and operating infrastructure projects.
The company is a wholly-owned subsidiary of Sical Logistics. Sical Infra had sought FIPB’s permission to induct foreign funds through issue of compulsorily convertible debentures to Old Lane Mauritius. The equity ratio between Sical Infra assets and OldLane Mauritius is proposed to be in the ratio of 74:26.
Sical was one of the 14 private container operators to have been given licences from the railways. A senior official in the railways said that the company’s proposal would have to be scrutinised as the foreign fund induction should not violate principles of concession.
As per existing FDI norms, under Press note 4 of 2006, investing companies in infrastructure are permitted to hold up to 100% foreign equity.
OldLane Mauritius, part of OldLane LP, has been set up as an investment vehicle by OldLane to invest in infrastructure sectors in India. The company is a Sebi-registered foreign venture capital investor. Sical Logistics has proposed to transfer a mix of minority and majority stakes in many of its special purpose vehicles for different projects to Sical Infra Assets. The SPVs are Sical Multimodal Rail Transport Company, Sical Distriparks, Sical Iron Ore, Chennai International Terminals, PSA Sical Terminals, Sical Distriparks and Nagpur Sical Gupta Road Terminals.
Source: Economic Times