Silicon Valley headquartered investors Bessemer Venture Partners and Lightspeed Venture Partners have invested Rs 70 crore in Indian Energy Exchange Ltd (IEX), the country's largest power trading exchange.
IEX, promoted by Financial Technologies and PTC Financial Services, provides an electronic platform to industry players for trading of power. Both VC firms, who picked up stakes for Rs 35 crore each, have invested through a mix of secondary stake sale by exisiting investors and fresh infusion through compulsarily convertible preference shares (CCPS).
Currently both Bessemer and Lightspeed hold a 5.56% stake each in the exchange, which will increase once the CCPS are converted. The deal includes Rs 35 crore in secondary stock purchase from Financial Technologies, which has also promoted MCX, and PTC Financial Services. The remaining investment is in the form of primary infusion.
Bessemer's Vishal Gupta and Lightspeed's Bejul Somaia have joined the board of IEX as additional directors.
Indian Energy Exchange started operations in 2008 and provides a day ahead and weekly spot trade in electricity. IEX has 29 state utilities, 112 private generators and over 360 industrial consumers. According to a statement on its site dated October 11, 2010, total turnover has crossed Rs 7,200 crore with about 87% market share. IEX also clocked the peak daily trading volume of 59.97 million units on September 24th , 2010.
While Financial Technologies holds a 33.49% stake as the largest shareholder, PTC Financial has a 21.12% stake in IEX. It also has power firms like Tata Power, Reliance Energy, Adani Enterprises, Jindal Power and Lanco Infratech besides IDFC and Rural Electrification Corporation. IEX reported a total income of Rs 22 crore in FY10 as compared to Rs 13.5 crore in FY09. Profit-after-tax stood at Rs 3.84 crore in FY10 as compared to a loss of Rs 3.4 crore in FY09.
The demand for exchange comes as there is an excess of short-term power which is out of the power-purchase agreement. Another exchange in the space is Power Exchange India Limited, which has been promoted by National Stock Exchange (NSE) and the National Commodity &
Derivatives Exchange (NCDEX).
"From a power exchange perspective, the amount of short term power in India which is out of the long term power purchase agreements is growing. Also, merchent power can be sold in lots like day ahead, week ahead contracts," said Vishal Gupta, MD of Bessemer Venture Partners.
Bessemer has invested across the value chain in the power sector with Ind-Barath Power Infra (a power utility firm), Orient Green Power Ltd (a renewable energy firm), Applied Solar Technologies (solar energy technology and installation management services ), Shriram EPC (EPC
services for renewable energy) and Sunil Hi-Tech Engineers (fabrication, erection and commissioning works for power plants).
Lightspeed has till date invested in education services firm TutorVista, prepaid cards firm ItzCash and local information services firm AskLaila.