IDFC Private Equity has invested Rs 200 crore in Bangalore-based engineering, procurement, and construction (EPC) firm Deepak Cables (India) Limited. The company is involved in power transmission & distribution (T&D) space. The present investment follows the Rs 85 crore investment by UTI Ventures in June of this year. Deepak Cables started out as an aluminium conductors manufacturing company and now has a presence in the T&D EPC space. The funds raised will be used by Deepak Cables for its working capital requirements and capital expansion for new projects. Some funds will also go into new business that firm is evaluating.
IDFC PE believes that there will be a lot of investments in T&D space given the emphasis to this space by Government in the Eleventh five year plan. "Globally the amount of investment in transmission lines is equal to investment in generation, and in India it's half of that," said Luis Miranda, President & CEO of IDFC PE, commenting on the attractiveness of this space.
There are several large players in this field Kalpataru Power Transmission, Jyothi Structures, Alstom and KEC International. Deepak Cables, which is a medium sized player, will now expand its presence across the country. "Its got a strong presence in South and now its going national," said Miranda.
Deepak Cables has two aluminium conductor manufacturing plants at Tumkur and Pondicherry. Its clients include KPTCL, PGCIL, MSEDCL, Discoms, etc. Deepak presently has projects in Karnataka and Maharashtra. The firm has revenues of Rs 750 crore and is promoted by Venkateswara Rao, who is the brother of Sairam Krishna of Karuturi Global Ltd, the largest exporter of roses from India.
Bangalore-based O3 Capital was the adviser in the transaction to Deepak Cables.
Focus on Power
"The focus today is on the power sector," said Miranda. This would be IDFC PE's third consecutive investment in power sector. Its last investment was Rs 400 crore in SE Forge Ltd, a subsidiary of Suzlon Energy Ltd. It was also part of the consortium of investors who pumped in $92.5 million in Moser Baer PhotoVoltaic in September this year.
IDFC PE is also diversifying its portfolio with these investments in power sector. "In the past we have invested a lot in the transport sector," said Miranda. IDFC PE has invested in several shipping and port companies out of its first two funds. It has also invested in couple of logistics firms and a highway construction firm. IDFC Private Equity has raised more than $1.3 billion across three funds, and raised $700 million for its latest third fund.