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The Hyderabad Metropolitan Development Authority (HMDA) plans to raise INR 20,000 crore to finance major infrastructure projects, including two elevated corridors, a cable bridge, and nine radial roads linking the Regional Ring Road. To facilitate this, HMDA has invited expressions of interest (EOI) to appoint an advisor-cum-merchant banker for fund mobilisation via bond issuance. The advisor will oversee structuring, credit enhancement, and legal processes. With an immediate requirement of INR 5,000 crore, HMDA aims to pledge assets to attract investors after shelving its initial land auction plans due to weak market conditions.
The Hyderabad Metropolitan Development Authority (HMDA) is set to raise INR 20,000 crore to implement various infrastructure projects across Hyderabad. To facilitate this process, HMDA has invited expressions of interest (EOI) to appoint an advisor-cum-merchant banker. This advisor will oversee the fund-raising efforts within 18 months, with a possible extension of up to one year if necessary. Advertisement
The planned projects include the construction of two elevated corridors, connecting Paradise to Shamirpet and Paradise to Old Dairy Farm along NH 44, a cable bridge over Mir Alam Tank, and nine greenfield radial roads linking the proposed Regional Ring Road (RRR). The two corridors alone will require an estimated INR 5,000 crore, while the development of the radial roads has been allocated INR 3,000 crore.
To secure funding, HMDA is willing to pledge its properties and lands. This strategy has been employed previously, notably when lands in Kothwalguda were mortgaged to fund initiatives like the PVNR Expressway and Phase I of the Outer Ring Road (ORR). According to sources, HMDA urgently needs INR 5,000 crore over the next four to five months to initiate work on these projects.
Initially, the state government had considered auctioning urban lands to generate the necessary funds. However, this plan was abandoned due to weak market conditions in the real estate sector. The authority has now shifted its focus to raising funds through the issuance of bonds. This approach will be managed by a skilled advisor who will ensure efficient fund mobilisation.
The responsibilities of the selected advisor include structuring the bond issuance, enhancing credit, assessing tax implications, and determining whether the placement will be public or private. Additionally, they will assist in appointing legal counsel and rating agencies while also handling formalities related to both the issuance and post-issuance phases.
The HMDA's EOI document highlights the importance of appointing an advisor with expertise in fund mobilisation and related activities to ensure the success of this ambitious initiative. The initial deadline for submitting EOIs was set for January 18 but was extended by a week due to a lackluster response from potential applicants.
By focusing on bond issuance as the primary funding mechanism, HMDA aims to overcome financial constraints and move forward with critical infrastructure projects that will enhance connectivity and development in Hyderabad. The outcome of this initiative will depend heavily on the appointed advisor's expertise and the authority's ability to attract investors despite challenging market conditions.
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