Private equity funds are finally putting money in power generation. In the first-ever investment by PE funds in the local power sector, CVC International and UTI Ventures have picked up around 30% stake in the Hyderabad-based Ind Barath Infra for Rs 290 crore.
Sources said Rs 250 crore was raised from Citigroup Venture Capital International Growth Funds, managed by Citigroup, while UTI Ventures invested the remaining Rs 40 crore.
Ind Barath Power Infra, which has struck unique deals in captive generation, has joined hands with three big groups — TVS, Sundaram and Ashok Leyland — to set up captive power plants for them. Ind Barath holds 74% stake in each venture, with the remaining 26% being held by the consumer.
It has interest in five power plants aggregating to 144MW capacity, while another five plants of 525MW are under various stages of execution. Close to 95MW of power generation capacity will use renewable sources as fuel, the remaining are thermal power plants. Sources said Motilal Oswal Investment Advisors acted as advisors to Ind Barath Power Infra.
A senior official from Motilal Oswal Investment Advisors said the power sector in India is hungry for large private investment to reduce the ever-widening demand-supply gap. “The investment in Ind Barath reaffirms the foreign investors’ interest in the sector,” he said.
A senior PE investor said there are tremendous opportunities opening up in the power sector. “Before entering the generation/distribution sectors, many PE investors have already invested in power ancillary sector,” he said.
Apart from Citigroup, Warburg Pincus, Actis Temasek and Clearwater, among others, have had talks with leading power companies including Tata Power, Reliance Energy and GVK Power & Infrastructure for possible investments.
However, the sector has not produced any PE deal so far. Besides power, PE funds are showing an appetite for infrastructure sectors like aviation and roads. The government’s recent moves to attract investments in the power sector through mega investments in ultra mega power projects have caught the attention of power majors and PE funds.
Source : Economic Times