Warburg Pincus India Pvt. Ltd has bought a stake in Diligent Power Pvt. Ltd to enable the Dainik Bhaskar Group company to accelerate its plans to construct power plants, the company said in a statement.
Diligent Power didn't disclose the investment amount or the stake sold in the statement on Wednesday.
Diligent Power is in the process of setting up power projects with a capacity to generate 6,400 megawatts (MW). These power projects include a 1,200MW coal-based thermal power plant in Chhattisgarh and a 1,320MW thermal power plant in Madhya Pradesh.
“Diligent Power has planned significant long-term initiatives to capitalize on the huge potential presented by the sector,” R.K. Gupta, chief executive of Diligent Power said in the statement.
Avendus Capital Pvt. Ltd advised Diligent Power. Amarchand and Mangaldas and Suresh A. Shroff and Co. were the legal advisers to Diligent Power and AZB and Partners were legal advisers to Warburg Pincus. KPMG India Pvt. Ltd conducted financial and accounts inspection for the transaction.
DB Power Ltd, in which Diligent Power has a majority stake, has signed accords with Chhattisgarh to build two thermal power plants of 1,200MW and 1,320MW capacity. State Bank of India and IDBI Bank Ltd are the lenders for the Chhattisgarh projects. DB Power has also signed a agreement in 2008 with Madhya Pradesh to build a power plant in that state.
“The company has placed orders to Bharat Heavy Electricals Ltd and Larsen and Toubro Ltd for the 1,200MW power plant in Chhattisgarh and is in the process of placing orders for the second power plant,” said Prason Pande, head of investor relations at Diligent Power. DB Power is also in the process of achieving financial closure, or commitments for funding, for its 1,320MW thermal power plant in Madhya Pradesh, he said.
Private equity (PE) investors including 3i India Infrastructure Fund and New Silk Route have invested $75 million this year in Indian utility and energy companies including Ind-Barath Energy (Utkal) Ltd and Kiran Energy Solar Power Pvt. Ltd, according to data from Dealogic (Holdings) Plc. Last year, PEs invested more than $787 million in companies including Avantha Power and Infrastructure Ltd, GVK Energy Ltd and GMR Energy Ltd.
New PE funds from Europe, North America and West Asia, with exposure to the power sector globally, may also make an entry as they see the market stabilizing, Kuljit Singh, partner, infrastructure practice, Ernst and Young India Pvt. Ltd, had told Mint on Monday.
“PEs are going in for fixed returns in the range of 20-25% owing to risks associated with greenfield projects,” he had said. Since PEs expect a certain return on investment, promoters use bank debt during the initial stages of projects, Singh said.
Source: istockanalyst