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Fidelity Picks Up Stake In Power Transmission Co.

19 October, 2010

Fidelity Growth Partners India (FGPI), the private equity arm of Fidelity International, has taken a minority stake in Shreem Electric Ltd, a technology-oriented multi-product company which manufactures equipment and provides turnkey project solutions for the power transmission and distribution industry. The transaction details are not known.

Fidelity typically makes investment in the range of $10 million to $50 million across companies in a sector-agnostic approach.

The monies will be used by the company in scaling up its turnkey project operations in the power transmission and distribution sector, and build a global electrical equipment and project company.

The capital raised will fuel the company’s growth. It has no immediate to medium term plans to pursue inorganic growth opportunities, Raj Dugar, Managing Partner, Senior Managing Director at FIL Capital Advisors (India), told VCCircle. The company said that it generated revenues of close to Rs 400 crore in the previous financial year.

Established in 1976, headquartered in Kolhapur district, Shreem Electric essentially began as an equipment manufacturer and evolved into becoming a market leader in high-tension capacitors.

The company recently expanded its product portfolio to include other medium and high voltage equipment like circuit breakers, instrument transformers, control & relay panels, lightning arrestors and other devices which are core ingredients in a transmission and distribution network.

In the projects solutions business, Shreem has designed and executed more than 2,000 capacitor bank and 100 electric substation projects across the country, from 33KV to 400KV, through its pan-India sales and service network.

FGPI recently picked up a minority stake in PL Engineering, a subsidiary of Punj Lloyd, for an undisclosed amount. PL Engineering provides high-end design services to construction firms.

Fidelity’s other investments in India include Coastal Projects, Netmagic Solutions, Manthan Systems and Vuppalamritha Magnetics Components.

Though sector agnostic, Dugar said that they are particularly excited about the high growth infrastructure piece and that Shreem is well positioned to capitalize on the tremendous growth seen in the power sector.

Action In “Infrastructure Enablers”

With infrastructure slated for high growth and PE funds, which cannot make investments in core infrastructure owing to their “growth equity” nature, a lot of action is seen in the ancillary or “infrastructure enabler” space.

Recently, Clearwater Capital hiked its stake in Diamond Cables by purchasing 2.2% stake for around Rs 10 crore through the secondary market which took its total holding to 13.77%. Originally an electrical products maker, the company diversified into a manufacturer of power transmission equipment and turnkey services provider (EPC).

NYLIM Jacob Ballas India Fund III, LLC, a Mauritius-based private equity vehicle dedicated to India, infused Rs 152 crore into SEW Infrastructure Ltd, an engineering, procurement and construction (EPC) company in Hyderabad.

Axis Private Equity already has investments of Rs 126 crore in Delhi-based railway line manufacturer Harish Chandra India Ltd (HCIL) and Rs 60 crore in Vishwa Infrastructures and Services, which executes projects in the water supply and sanitation sector.

Clearly, deals are coming back particularly where infrastructure is the central theme. Nitin Bhasin, Head, Infrastructure, Noble Execution Group, said, while the government has announced plans for infrastructure investment of $1 trillion over FY12-17 (2X the amount for FY07-12), it needs to fill critical gaps in planning, policies and procedures before such magical numbers can be hit. About 50% of this $1 trillion will be met by private sector schemes.


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Fidelity Picks Up Stake In Power Transmission Co.

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