Gammon to bring in strategic investor for European offshore subsidiary

BANGALORE: Mumbai-based, Infrastructure firm Gammon India is looking to bring in strategic investors in its European offshore subsidiary, Gammon Holding BV, to expand its power business.

Gammon India acquired three Italian companies back in June 2008, for which it had raised about Euro 100 mn at 2.25-2.5% over the prevailing Libor rate. This has added cost of servicing the debt on the company's books since then.

“In 2010, the subsidiaries posted a loss of 9m euros due to slow order awards and delays in providing bank guarantees for projects. In 2011, we expect the international order book to pick up marginally. In CY10, the international order book was 1,093m euros and in CY11, Gammon expects 11% growth to 1,224m euros,” mentioned a report by Motilal Oswal.

Gammon Infrastructure Projects Limited, the listed arm of Gammon India, which largely operates in the roads and ports verticals, is also part of the restructuring process. The company plans to hive off these different verticals and list them separately to unlock shareholder value over the next two years.

Motilal Oswal has maintained `Neutral` on Gammon India with a price target of Rs 117 as against the current market price (CMP) of Rs 98 in its report dated Jun. 14, 2011.

The shares of Gammon India were trading at Rs 97.50 up 0.93% on BSE while the stock of Gammon Infrastructure Projects Limited remained.