ANALYSIS OF AVAILABLE OPTIONS

PROS/CONS
OPTION
50% of the Equity
Stake
purchased
OPTIO by an American
N1
Investment
Bank
for $85 millions

PROS
Liquidity and sharing of risk
related
to
Traffic,
Completion, etc. 50% stake
for
ownership
and
testimonials
and
O&M
Contractor.
74% of the Equity Reduced Risk Exposure and
Stake
purchased options for liquidity. 26%
OPTIO by
a
Global stake for testimonials and
N2
Infrastructure
50% O&M Contractor.
Owner for $133
millions
100% of the Equity This will give instant liquidity
Stake
purchased and also a growth in traffic
OPTIO
by
an
Indian will fetch more money.
N3
Investment Firm for
$185 millions

CONS
Risk
of
sharing
the
uncertainty involved in
future cash flow along with
restriction on ownership
decisions.
Will not be a key Decision
Maker and also 26% is a
very small share to again
propose in market at good
prices
Can
not
include
in
Testimonials. Money comes
in 2 instalments with
restriction
based
on
completion

FINANCIAL ANALYSIS
Returns
Analysis
Equity IRR
Valuation
Date
Discount
Rate

No Sale
22.4%
31-Mar14
15.0%

Available Options
50%
74%
Sale
Sale
Received at
$85.0
$133.0
Sale
Value
$109.9
$57.2
Retained
Total
$195.0 $190.0

100%
Sale
$185.0
$23.0
$208.0

For the financial Analysis, we have taken the Net Present Value of the project to
be $220 millions with keeping Equity IRR at 22.4% for 30 Years. Evaluating all the
option on the basis of the Received monetary Benefit at time of Sale and value
retained from the project, it is observed that not selling the project seems to be
the viable option from financial perspective.
OPTION
PROS
CONS
OPTIO Keeping
100% 100% stake guarantee a Risk
of
uncertainty
N4
share with us and highlighted testimonial and involved in future cash flow
not availing any better financial returns as and delay in completion of

offer at present

compared
options.

to

available work due

factors.

to

external

RECOMMENDATIONS
Expected cash flow from keeping the entire project with the company itself yields
highest expected cash flows of 220m$ (in present value terms). 100% ownership
allows the firm to keep complete control of all decisions of the project. Moreover,
owning and operating one of the most successful infrastructure projects in India
would add a lot of credibility to HCCs brand name when it comes to bidding for
future projects