New Delhi-based Aryan Coal Group, a provider of clean coal to power plants, has emerged as controlling shareholder of the 208MW gas fired Spectrum Power Generation Ltd, located in Kakinada, following the exit of the bankrupt Lehman Brothers earlier this year, said sources
tracking the development.
Aryan could be partnering with serial entrepreneur Prasad Potluri-led PVP Ventures Ltd, an urban infrastructure developer, in operating this project going forward, sources added.
One of the Aryan Group entities spearheaded a transaction paying off Lehman's debt, estimated at around Rs 400 crore, giving it control over the power plant, which has increased potential in the wake of the gas flow from KG Basin. Aryan Group has Warburg Pincus as a shareholder in its flagship ACB Ltd, formerly Aryan Coal Benefications Ltd.
Emails to Aryan Group and PVP Ventures remained unanswered at the time of posting this report. Repeated attempts to reach the Aryan Coal Group were not successful, while PVP Ventures Chairman and Managing Director Prasad Potluri declined to comment, when contacted.
SPGL was one of the country's first private independent power projects allowed in the early 90s but it ran into financial troubles and litigations thereafter. In 2006, Lehman's investment vehicle Pinnacle Overseas Assets Ltd emerged as the successful bidder for SPGL put on the block by Asset Reconstruction Company of India Ltd (ARCIL). Earlier, IDBI-led institutional creditors took charge of the company that amassed debts in excess of Rs 1,100 crore wiping out its net
Lehman's exit kicked-off early this year has been completed, one source directly involved with the developments said. Aryan, which had come in as a shareholder sometime ago, has picked up majority shareholding in the process.
PVP, which called off its merger with Malaxmi Energy Ventures, has been holding talks for a substantial stake buy in SPGL. Sources said PVP promoter may have already acquired an indirect interest in the power project, and would attempt to garner a sizable stake in SPGL.
PVP has been scouting for $100-150 million buy in the power sector after terminating the deal with Malaxmi, which would have given it access to projects in Orissa, Andhra Pradesh and Tamil Nadu. PVP Ventures, known as SSI Ltd in the past, has held discussions with at least two private equity giants to fuel its power dreams but could also tap other public equity routes to raise the requisite funds.
However, it is not clear whether Aryan will be keen on divesting large stake in the project which it started controlling only now. The views among the bankers diverged with some of them stating that Aryan Group has been scouting for power projects in different states and hence a divestiture was unlikely. There are others who argued that Aryan will be looking at strategic partners in individual projects to mitigate the risks.
Aryan Group is setting up thermal power plants in Chhatisgarh and Madhya Pradesh. Last year, its flagship ACB Ltd had planned to tap the capital markets with Rs 1500 crore IPO, which would have seen Warburg selling a part of its stake.
The private equity interest has been visible in number of deals in the power sector since last year. Overseas strategic players and business groups are also now looking to buy assets as they look to enter this space.
In one of the largest deals in recent times, Singapore's Sembcorp Industries acquired a 49% share in Hyderabad-based Thermal Powertech Corporation India, a wholly owned subsidiary of Gayatri Energy Ventures for Rs1,042 crore. Thermal Powertech is setting up a 1,320 MW (Phase-1) thermal plant at Krishnapatnam in Nellore district, Andhra Pradesh. Another deal was Calcutta Electric Supply Company (CESC), the flagship of the RPG Group, recently completed Rs 300 crore acquisition of Dhariwal Infrastructure, which is developing a 600 mw thermal power plant in Maharashtra.
Nagarjuna Construction (NCC) also plans sell a 49% equity in its 2,640 mw flagship thermal power project, reported DNA Money today.
Since the start of 2009, there have been 21 private equity investment in independent power producers in India with a reported value of $1.35 billion, according to VCCEdge, the financial research platform of VCCircle.