Funding partner required for EPC company
- Category : Infrastructure Development & Services
- Price/Amount : 7,500,000,000 INR
Our client is one of the leading players in civil construction sector focused on Building /
Structures & Housing Projects with a reputation for efficient project management and timely completion of projects. Company has successfully managed to leverage its experience in civil construction sector to extend its presence to institutional & infrastructure sector across 10 states in India. Having a strong workforce of over 4,000 people working in offices and projects across India.
Government in planning to float various large-scale tender specifically in Roads, Housing and railway sector.
The Companies’ vision is to create a healthy Order book of around INR 5000Cr. in upcoming three years. By using credential of the funding partner company, who can help them with Bank Guarantees/ Fixed Deposits they can build its order book to about INR 5000 Cr.
For quoting and timely – fast execution of any government tenders, especially EPC tenders they require total 15% of the project value.
- 10% in the form of bank Guarantees.
- 5% in the form of working capital.
In total, they would require Rs.750Cr (in tranches) for creating and executing contracts worth of Rs. 5000Cr.
- Rs 500 Cr. worth of Bank Guarantees or Fixed deposit that would be utilized in the
form of security deposit and performance guarantee to the client.
- Remaining Rs 250Cr. to be brought in the form of debt, for fulfilling working capital requirement for project
- This would be on a project-by-project basis.
A SPV, would be formed between the company and the funding (Investor) company in which investor would bringing finance or capital and the company would bring its technical credential that would be necessary for taking any contract.
As per the standard requirement of contract, the lead partner should fulfil all kind of major technical qualification of the contract hence 51% stake of the SPV would be in charge of the company.
Remaining 49% would in charge of investor. Additional to this 49% around 5% to 10% of share would be pledged to the investor which would act as the collateral or security against capital invested. If there is any breach in the contractual terms and condition from the side of borrower the investors would exercise its right and increase his stake in the SPV and become the owner of the formed SPV with all projects.
The company is willing raise the above-mentioned fund in the form of Debt and securing it by pledged equity. The minimum expected profit for such kind of EPC contract is 10%.
This 750Cr. invested in the form of bank Guarantees and working capital would be treated as loan for which we ready to pay token amount of 8% to 10% Per Annum as interest or token money on monthly basis.
Total investment of 750Cr. suppose the company is paying token money of 10%
|No of Years||Annual Interest in INR||Monthly Interest in INR
|Year 1||75 Cr||6.25 Cr|
|Year 2||75 Cr||6.25 Cr|
|Year 3||75 Cr||6.25 Cr|
|Year 4||75 Cr||6.25 Cr|
|Year 5||75 Cr||6.25 Cr|
|Year 6||75 Cr||6.25 Cr|
Borrower would repay the principle amount of Rs 750Cr. in seventh year by offloading equity equivalent to 750Cr. in the market through stock market. Hence against investment of INR 750 Cr. The investor would receive 750Cr. + 450Cr. + Market Premium on listing of shared on the stock exchange.