Private equity major Blackstone Group is investing Rs 275 crore (approximately $60 million) for 12.5% equity stake in Monnet Power Company Limited (MPCL). MPCL, an independent power producer, is developing a 1,050 MW coal fired power plant in Orissa backed by pit-head captive coal mines.
MPCL, a 100% subsidiary of Monnet Ispat & Energy Ltd, has a pipeline of a further 2000 MW under development. Monnet Ispat is India’s second largest manufacturer of integrated coal-based sponge iron.
Power sector has been a favourite among private equity players in India. In the last 12 months, there have been 20 investment in the power sector worth $1.2 billion in the power space (includingconventional and alternative energy), according to VCCEdge.
Some of the largest PE deals in in power space this year include $425 million investment by a consortium led by Morgan Stanley Infrastructure Partners in Asian Genco. Another recent deal was GMR Energy raising more than $300 million from investors including Temasek, IDFC Private Equity and Ascent Capital.
“I am glad to partner with one of the largest private equity investors in the world. Their interest in sharing knowledge with management and their deep understanding of the power industry globally and in India, will add value to MPCL in several ways for the benefit of its shareholders. We will be able to utilize our experience in setting up power plants and developing mines, while leveraging Blackstone’s global linkages and knowledge base,” said Sandeep Jajodia, Executive Vice Chairman and Managing Director of MIEL and Director of MPCL.
“Infrastructure development is critical for India’s growth and Blackstone is excited about participating in India’s growth through investments in the power sector. We believe that Monnet Power with its mine mouth coal plant has one of the lowest cost of producing power and, hence, is among the best positioned IPPs in the country,” said Akhil Gupta, Chairman and Managing Director of Blackstone Advisors India.
Kotak Investment Bank acted as the exclusive financial advisor to MPCL on the transaction.