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Temasek, IDFC Alternatives among others to swap investment worth $183M in GMR Energy with stake in parent GMR Infrastructure

Temasek will get around 8.5 per cent while IDFC Alternatives will own 0.45 per cent of GMR Infrastructure after converting preference shares into equity.

Singapore’s sovereign wealth fund Temasek, IDFC Alternatives among other private investors in GMR Energy are swapping bulk of their investment in the firm with a stake in the listed parent GMR Infrastructure, as per a stock market disclosure.

This comes at a time when GMR Energy is looking to float an IPO. However, the primary market in the country is not conducive for fresh issues, partly due to outflows from emerging markets.

These investors had put in Rs 1,395 crore in GMR Energy through Compulsorily Convertible Preference Shares (CCPS) in 2010. They are now picking CCPS worth Rs 1,136.6 crore ($183 million) in GMR Infrastructure, which would give them around 12.2 per cent of the diluted equity base of the listed firm on conversion of the securities into shares.

Their remaining investment worth Rs 254 crore in GMR Energy will continue as it is.

Temasek will be allotted CCPS worth Rs 788.8 crore, which would give it around 8.5 per cent in GMR Infrastructure. The consortium of other investors led by IDFC Alternatives, will pick CCPS worth Rs 347.8 crore.

IDFC Alternatives, the PE arm of IDFC, would get 0.45 per cent of GMR Infrastructure as part of the restructuring. This would be the second such equity swap for the PE firm with GMR group and third such deal in the infrastructure space. Three years ago, it had swapped its stake in the components arm of wind turbine maker Suzlon Energy Ltd for an interest in the listed parent company. It had previously also swapped shares in Delhi International Airport Ltd for a stake in GMR Infrastructure.

GMR Group chairman, G M Rao said, “This is the culmination of the long term partnership with the investors and demonstrates their confidence in the group. We are confident that together with the support from the investors, we will build a strong energy portfolio. This will also pave way for value creation at GMR Energy and GMR Infrastructure as the power portfolio has almost reached the peak of its capex cycle and is getting into the operational phase.”

Satish Mandhana, managing partner & CIO at IDFC Alternatives said, “GMR Energy has been our fourth investment with the GMR group in the past 10 years. This step is a clear demonstration of how the investors and GMR worked together to forge a win-win solution by being considerate of partnership obligations, in a very difficult and challenging external environment for the power sector. We look forward to a successful IPO of GMR Energy in near future.”

GMR Infrastructure Ltd. (formerly known as GMR Vasavi Infrastructure Finance Ltd.) is an infrastructure holding company of GMR Group. It undertakes the development of the infrastructure projects incliding airports, energy, highways, urban infrastructure other projects through its various subsidiaries. The company was founded in 1996 and is based in Bengaluru, Karnataka. GMR Infrastructure Ltd. operates as a subsidiary of GMR Holdings Pvt. Ltd.

GMR Energy Trading Ltd. is engaged in the business of trading power in India. It provides power exchange services under which nationwide, automated, online electricity trading platform has been established and bilateral services for sale and purchase of power from captive power plants, independent power producers and state utilities on intraday, day ahead, week ahead and month ahead basis. The company was incorporated in 2008 and is based in Bengaluru, Karnataka.

(Temasek Holdings Pvt. Ltd.)

Temasek Holdings Advisors India Pvt. Ltd. (formerly Temasek Holdings Pvt. Ltd.) is a private equity firm. It provides growth capital to companies operating in Asia and Latin America. The firm seeks to invest in financial service, telecommunications, media and technology, transportation and industrial, life sciences, consumer and real estate and energy sectors. The company was founded in 1974 and is based in Mumbai, Maharashtra with headquarters in Singapore and additional offices in Brazil, China, Vietnam and United States.

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