Baring Private Equity Partners India (BPEP India), a leading Indian private equity firm with about $1 billion under management, has signed an agreement to invest in Cethar Vessels Ltd., a Tiruchirappalli-based power equipment manufacturer. Siguler Guff India Advisors Pvt. Ltd, the India arm of a leading global fund of funds and an investor in BPEP India, has also co-invested along with Baring in the company, which makes boilers and captive power plants, sources told VCCircle.
Both have agreed to infuse about $80-100 million, the sources added, for an unspecified stake.
In response to an email sent to confirm the development, a BPEP India spokesperson said,"As a company policy, we do not comment on market speculation." Praneet Singh, Managing Director, Siguler Guff India Advisors, declined to comment on the deal. An email sent to Cethar Vessels Ltd did not elicit any response till the time of publication of this article.
Cethar Vessles, founded in 1981 by a first generation entrepreneur and current chairman, K.Subburaj, a mechanical engineering graduate from Thiagaraja College of Engineering, Madurai, claims to be the second largest boiler manufacturer, next to the public sector major Bharat Heavy Electricals Ltd, which commands about two-third market share. Cethar achieved a sales turnover of Rs.1,405 crore in 2007-2008, according to its website.
BHEL had revenues of Rs 33,572 crore in 2009-10 with net profits of Rs 4310 crore. The other large companies in this peer group are Siemens (2009-10 sales: Rs 9,400 crore), Crompton Greaves (Rs 5,284 crore) and ABB (Rs 6,291 crore), all of which are listed.
Cethar had been scouting for PE funding since 2007, according to an Economic Times report, however, this could not be independently verified.
Sources said that the company intends to utilise the capital raised to increase its boiler capacities and resume its plans of getting into making turbines.
Cethar, which has been in the boilers business for quarter of a century, also recently got into the manufacture of supercritical boilers. It secured the ‘supercritical technology' (boilers that operate at higher temperatures and pressures and are hence more efficient) from Siemens, via the former's long-time technology partner, US-based Riley Power.
There are few private equity deals in this space. In 2009, Motilal Oswal Private Equity Advisors Pvt Ltd (Motilal PE) invested Rs 40 crore in Power Mech Projects Ltd for an undisclosed stake. The company is engaged in erection, testing and commissioning of boilers, turbines and generators for thermal and gas-based power plants besides overhauling and maintaining them.