PSP Projects (PSPPROJECT) M&A announcement summary

Deal rationale and strategic fit

• Entered a share purchase agreement with Adani Group to drive the next stage of growth and leverage Adani's large infrastructure pipeline, especially in buildings, airports, and realty sectors.

• Partnership aims to provide assured business, profitability, and technological advancement, particularly in precast construction.

• The collaboration is expected to enhance visibility and market positioning, with Adani planning $100 billion CapEx over the next decade.

Financial terms and conditions

• Adani Infra will acquire a 3.07% stake from the founder promoter, followed by an open offer for 26%.

• Both parties will maintain equal equity post-open offer, with mechanisms to adjust shareholding to remain 50/50 for the next 10 years.

• Lock-in period for shareholding is five years, with a 10-year shareholder agreement governing further changes.

• Deal price set at INR 575 per share, with total proceeds of INR 685 crore to the promoter.

Synergies and expected cost savings

• Partnership will enable faster project execution, leveraging precast technology to reduce timelines and management/labor costs.

• Cost-plus contract model with fixed profit and overheads aims to maintain EBITDA margins at 10%+.

• Improved cash flow expected due to timely payments from Adani projects.