| Galaxy Investments II Pte. Limited | ||
| ‘CCR AA/Stable’ assigned to Corporate Credit Rating | ||
| Rating Action | ||
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| 1 crore = 10 million | ||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has assigned its ‘CCR AA/Stable’ corporate credit rating (CCR) to Galaxy Investments II Pte. Limited (Galaxy). Funds, vehicles and/or entities managed and/or advised by Kohlberg Kravis Roberts & Co. LP and/ or its affiliates (collectively, KKR) are investors in Galaxy.
The rating reflects the company’s healthy financial flexibility, in the absence of any external debt and the strength that Galaxy derives from its investments in two annuity and four toll road assets (assets). The assets comprise Dewas Bhopal Corridor Pvt Ltd (DBCPL, rated ‘CRISIL AAA/Stable/CRISIL A1+’), Jodhpur Pali Expressway Pvt Ltd (JPEL), Godhra Expressways Pvt Ltd (GEPL), Ulundurpet Expressways Pvt Ltd (UEPL), Nirmal BOT Ltd (Nirmal) and Shillong Expressway Pvt Ltd (SEL), which are proposed to be transferred to the Highways Infrastructure Trust (HIT; rated Provisional CRISIL AAA/Stable) in exchange for units in the trust. The rating also factors in the articulation provided by the company, confirming that there are no plans to raise any external borrowing. Any investment and other cash flow requirement shall be met by capital infusion from KKR and not via external debt. This strength is partially offset by subordination to external senior lenders for distribution of surplus cash flow from the assets to Galaxy, under the waterfall mechanism. |
Analytical Approach CRISIL Ratings has followed the holding company approach to assess the credit risk profile of Galaxy, based on investment in operating companies, i.e., two annuity and four toll road assets. These assets are expected to be transferred to HIT. Currently, it does not plan to invest in any other entity in near future, except for assets acquired on an interim basis with an intent to transfer them to the infrastructure investment trust (InvIT). |
Key Rating Drivers & Detailed Description Strengths:
Galaxy is likely to receive steady cash flow from its stake in the assets/HIT, in the form of interest, dividend and principal repayment. This cash flow should suffice to cover the operational expenses.
Furthermore, the strong counterparty profile and diversified portfolio of two annuity and four toll road assets lend stability to the cash flow being generated. Furthermore, post transfer of assets to HIT in exchange for units, the regulation requires distribution of at least 90% of net distributable cash flow (NDCF) from the assets to the InvIT and 90% of the InvIT’s NDCF to unitholders (Galaxy being one of them).
Highway Concessions One (HC1) has been appointed to manage the road assets held by Galaxy. This company is debt-free and has no plans to avail any external debt in future. Considering the strength of the assets, HC1 may not require any support from Galaxy.
Galaxy has no external debt and has confirmed that none of its stakes in group companies are encumbered, except for the pledges created for senior secured lenders at the relevant project companies. Furthermore, the company has also indicated that any investment or cash flow requirement will be met through funding from the holding company and not via external debt. The current loan from shareholders is interest-free and has no contractual debt servicing obligation. Any deviation in this understanding will be a rating sensitivity factor.
Weakness:
The right held by Galaxy over assets or cash flow of HIT will be subordinated to that of external lenders, and be available for upstreaming after all the debt servicing and reserve requirements of these lenders are met. However, the strong credit profile of assets/HIT with an adequate liquidity cushion mitigate this risk. |
Liquidity: Strong Galaxy had cash balance of about USD 23 million as on December 31, 2021. The company does not have any debt obligation and cash generated from assets/HIT will suffice to cover the operational expenses. |
Outlook: Stable CRISIL Ratings believes that the credit profile of Galaxy is supported by the high value of investments in key operating entities and the absence of external debt. Further, it is expected to enjoy strong financial flexibility through stable cash inflows from HIT in future. |
Rating Sensitivity factors Upward factors:
Downward factors:
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About the Company, Galaxy Galaxy, incorporated in June 2021, is the sponsor of the infrastructure investment trust, HIT. It is a 100% subsidiary of Galaxy Investments Pte Ltd, which is majority owned and controlled by KKR Asia Pacific Infrastructure Holdings Pte Ltd.
Being an affiliate of KKR, Galaxy seeks to invest in companies incorporated in India, and operating in the infrastructure sector. |
About KKR KKR is a leading global investment firm that offers alternative asset management, capital market and insurance solutions, with approximately US$ 479 billion of assets under management as of March 31, 2022. KKR sponsors investment funds that invest in private equity, credit and real assets, and has strategic partners that manage hedge funds.
KKR, through its Asia infrastructure fund, has invested in India Grid Trust (power transmission InvIT, rated ‘CCR AAA/CRISIL AAA/Stable’), Virescent Renewable Energy Trust (renewable energy InvIT, rated ‘CRISIL AAA/Stable’) and HC1 (roads platform) in India. |
Key Financial Indicators
*Financial indicators not meaningful as Galaxy was incorporated in June 2021. |
Any other information: Not applicable |
| Note on complexity levels of the rated instrument: CRISIL Ratings' complexity levels are assigned to various types of financial instruments. The CRISIL Ratings' complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL Ratings' complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments. |
Annexure - Details of Instrument(s)
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| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||
Criteria Details
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