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Guggenheim Partners Takes 46% In AIM-Listed Infra India

16 February, 2011

AIM-listed investment company Infrastructure India plc, that shifted out of the main market at London Stock Exchange last year, is raising $53 million (£33 million) and has also struck a deal to acquire large stakes in two Guggenheim Partners-backed Indian firms that will give the US-based asset management firm as much as 45.59% in Infrastructure India plc, that focuses on investments in Indian infrastructure assets.

According to the plan, Infrastructure India plc will acquire two infrastructure assets in India where Guggenheim has investments through a mix of cash-cum-stock deal. The two deals will be through the issue of up to 111.25 million new ordinary shares of Infrastructure India plc and a cash payment of $1.5 million, pegging the estimated net asset value of such assets at approximately $191.5 million.

It will acquire 50% held by Franklin Park (another affiliate of Guggenheim Partners) in India Hydropower Development Company, LLC (IHDC) which has developed, completed and operates hydroelectric power assets.

Infrastructure India plc is also acquiring up to 99.99% of Vikram Logistic & Maritime Services Private Limited (VLMS), a company that has developed and operates transportation and container processing infrastructure in India.  VLMS is also in the process of acquiring two substantial tracts of land in Bangalore and Chennai to develop new container processing facilities, including, potentially, two FTWZ bonded warehouse facilities.

Approximately 37.39% of VLMS will be acquired from a wholly owned subsidiary of Global Infrastructure Co Ltd (GGIC) which, in turn, is an affiliate of Guggenheim Partners. The remaining stake will be purchased from Anuradha Holdings Private Limited, a company owned and controlled by Vikram Viswanath who has been associated with VLMS since its inception.

This equity issue in addition to further placement of 12.39 million shares for raising additional funds will make Guggenheim the largest shareholder of Infrastructure India plc. But the investment management firm may not be required to make a general offer to other shareholders pursuant to the deal which is in effect a reverse takeover. The new shares are expected to be admitted for trading as of March 3, 2011.

BOARD CHANGES:

Tom Tribone, Sonny Lulla, Rob Venerus and Tim Stocks are expected to joint the board of Infrastructure India plc as a result of these transactions and post completion of acquisition of VLMS, Vikram Viswanath will also be appointed to the board.

At the same time, Prodaman (Pommy) Sarwal, a non-executive director, has resigned from the board with immediate effect and after the Guggenheim share issue, Rupert Cottrell, currently chairman, will become deputy chairman, while Philip Scales, another non-executive director, will also resign from the board.

Incidentally, Advance UK, that owned 10.1% stake in Infrastructure India plc, had over a year ago tried unsuccessfully to remove three out of four board of directors including Rupert Cottrell, Prodaman Sarwal and Timothy Walker.

FRESH FUND RAISING:

The company is also raising $53 million (£33 million) through fresh issue of shares to a bunch of existing shareholders besides Guggenheim. The existing shareholders including Utilico Emerging Markets Limited that currently owns 11.06% of the firm alongwith few director shareholders and others will subscribe to new shares worth $41 million (£25.5 million). Guggenheim will buy shares worth $4.02 million (£2.5 million) in addition to a further $8.04 million (£5.0 million) (conditional upon completion of the aforesaid acquisition of assets).

Rupert Cottrell, Chairman of Infrastructure India, said the placing will further enhance the ability of the group to bring both its existing investments to completion and full revenue generation. “The proposed acquisitions of interests in hydroelectric power and container freight infrastructure assets in India, respectively, represent income producing and in-development assets, as well as increased sector diversification, and should materially augment the company’s presence and profile in India as well as within the infrastructure sector more generally.”

INVESTMENT MANAGER

Infrastructure India plc that had last year terminated its investment management agreement with Bloomsbury Asset Management Advisors to appoint Akur Partners will once again see change in asset manager with the transaction and Guggenheim Franklin Park Management, LLC that is a part of Guggenheim will become the new manager. Akur will be appointed as the valuation and portfolio services adviser to the group and will continue to act as the company’s financial adviser.


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Guggenheim Partners Takes 46% In AIM-Listed Infra India

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