GMR Energy Limited, the energy arm of diversified GMR Group, has decided to raise capital from investors led by the IDFC Group for its energy expansion plans. The IDFC Group and co-investors, Argonaut Ventures and Ascent Capital, have signed a shareholders’ agreement to invest Rs 465 crore into GEL. In April, Singapore investment fund Temasek Holdings invested $200 million (about Rs 936 crore) in GMR Infra. Prior to that, the company raised another $315 million (about Rs 1,475 crore) from share sale to institutions. GMR Energy is engaged in the business of power generation, transmission and distribution.
The funds from the IDFC Group-led investor group will support the company in expanding its power generation capacity from 808MW to more than 6,500MW over the next few years. The company has already achieved financial closure and fuel linkages for GMR Kamalanga (1,050 MW capacity, which is being enhanced to 1400 MW and EPC contract for the expansion is finalised with SEPCO, China, who are also the EPC contractors for 1050 MW capacity) and Emco Energy (600MW). Several other projects are also in an advanced development stage, said a company statement.
GM Rao, GMR Group chairman said, “We are extremely happy to have IDFC Group, Argonaut and Ascent as the shareholders of GEL. Our relationship with the IDFC Group has been sustained over time and we are confident that this relationship will continue to be a mutually gratifying experience for both parties”.
Rajiv Lall, Managing Director & CEO of IDFC said, “The GMR Group is one of the most dynamic and capable infrastructure developers globally. The Indian power generation sector represents an attractive investment opportunity given the current supply-demand imbalance. GMR Energy Ltd (GEL) has an experienced team, proven track record in implementing power projects and diversified fuels assured asset portfolio.”
Last month, GMR Infrastructure Ltd, the infrastructure and power subsidiary of GMR Group, had received board approval to raise Rs 5,000 crore in equity. The proposed fund would be raised though multiple routes including global depository receipts (GDRs), American depository receipts (ADRs), foreign currency convertible bonds (FCCBs), qualified institutional placement (QIP).
The dire need for additional capital for expanding capacities in the wake of higher demand makes the power sector an attractive investment target for the PE players. Last week, VCCircle had reported plans of Regen Powertech, a PE-backed wind turbine manufacturer, to raise its second round of private equity funding worth Rs 200-250 crore. Everstone Capital had invested about $25 million in Regen.
In 2010, till date, about 8 deals worth about $720 million have been struck in this space. Among the major deals include $425 million investment in Asian Genco Pte Ltd by various investors and $200 million in GMR Energy by Temasek Holdings. Since 2009, about $3.7 billion worth investment was made in 111 deals across power sector.
In 2010, Greenko Group PLC, a renewable energy generation company with focus on developing a portfolio of biomass, hydro electric and wind assets within India, received $34 million investment from TPG Capital Inc. Also, Auro Mira Energy Co. Pvt. Ltd, engaged in manufacturing and supplying wind energy generators, raised $10 million from International Finance Corp this year. Soham Renewable Energy Pvt. Ltd. which focuses on various segments of renewable energy, raised $19.25 million from FE Clean Energy Group Inc last year and raised $15 million from DE Shaw Composite Investments in 2008.