Power trading firm PTC India’s proposal to rope in foreign investors for its financial services arm is expected to come up for Foreign Investment Promotion Board (FIPB) approval during the board’s next meeting on November 16.
It’s understood that the PTC proposal includes allowing two private equity (PE) majors — Goldman Sachs and Macquarie — to acquire 40% equity in PTC Financial Services (PFS). PTC would retain the remaining 60% in PFS.
Though the names of the two players have been kept under wraps by PTC, pending FIPB clearance, sources said both the PE players would pick up 20% stake each in the company. The deal is expected to be in the region of Rs 120 crore.
An agreement on the terms and conditions of the deal has already been reached, but a formal announcement is expected only by the month-end. ET first reported about the deal with private equity players last month.
When contacted earlier, PTC chairman TN Thakur had said: “We have reached an advance stage of negotiations. But I would not like to comment on the details at this point.” The authorised share capital of PFS is Rs 600 crore while its paid-up equity capital is likely to be around Rs 300 crore.
While PTC would hold 60% stake in PFS initially, it is expected to dilute its holding further to 26% when the capital of the NBFC is raised further. PTC, formerly known as Power Trading Corporation, is diversifying beyond its traditional power trading business. It has set up PFS as a wholly-owned subsidiary for providing financial services for power-generation projects.
Registered as a non-banking finance company (NBFC), one of the main activities of PFS would be to pick up equity in power projects and facilitate financial closure.
Selection of the two private equity players as partners for PFS took a long time to finalise for PTC. The proposal received huge response from investors, thereby forcing PTC to appoint a consultant to finalise the equity partners. A source said PTC was also engaged in talks with Blackstone, Saloman Brothers and a few other PE players for bringing them in as strategic partners in PFS.
It’s believed that equity investment by PFS may be done through a fund — Energy Equity Fund — anchored by the company. The fund will tie up money from both domestic and international markets for investing in the Indian power sector.
Source: Economic Times