Gammon buys 50% stake in Italian co

In a regulatory filing, Gammon has informed BSE that its step-down offshore subsidiary has acquired 50% equity of Sofinter, the holding company of Ansaldo Caldaie, one of the major power equipment supplier in Italy. Though Gammon did not disclose the deal size, a source close to the development said it’s around $70 million.

The deal would also help Gammon to consolidate its presence in Indian power sector as Ansaldo Caldaie Boilder — the Indian subsidiary of Ansaldo Caldaie — has begun operations.

The Italian company is in the process of setting up a boiler manufacturing unit in Tuticorin in Tamil Nadu for an investment up to $20 mn. It has acquired land, about 25 km away from the Tuticorin Port. The manufacturing unit is designed to cater to the Indian market, and subsequently to the Asian markets. The Chennai-based company, so far, has received orders worth Rs 600 crore for the supply of boilers and components to Indian power utilities.

However, the acquisition has not gone down well in the stock market. The Gammon stock slipped 6% to close at Rs 213.65 on NSE.

In June this year, Gammon had acquired a majority stake in Italian turbine maker Franco Tosi Meccanica for euro 40 mn and a 50% stake in power sector services firm Sadelmi for $7.5 mn.

Sofinter is a highly-specialised company operating in the sector of steam and power generation using various fuels, biomass and municipal and industrial waste. Gammon plans to build large power projects in India on the strength of its overseas acquisitions.

The local electrical market is likely to see considerable activity as the government is planning to add close to 80,000 megawatts over the next five years. GMR Infrastructure recently acquired a 50% stake in US-based power firm Intragen for over $1 bn.