GVK Energy Ltd, a subsidiary of GVK Power & Infrastructure Limited, has raised another Rs 698 crore from emerging markets private equity major Actis and Government of Singapore Investment Corporation (GIC). The deal comes after 3i Group invested Rs 800 crore in the firm last month, taking the total fundraising to Rs 1,498 crore for an overall dilution of 24.97% stake in the infrastructure major’s power utility arm.
The deal would likely be the first exposure of GIC and Actis to the Indian power utility sector. Both PE firms will invest Rs 349 crore each, of which Rs 218 crore each will be invested as the first tranche of the deal.
Earlier this year, another Singapore government investment arm Temasek had invested Rs 930 crore in the power arm of GVK’s rival GMR.
VCCircle reported in August that GVK could raise up to $280 million from private equity majors 3i Group plc and Actis to fuel energy business.
The deal joins other mega deals in the power sector this year, which has accounted for more than 20% of the $8.2 billion worth PE deals struck in the 11 months of calendar year 2010, according to VCCEdge. Some of the largest deals include $425 million in Asian Genco by a consortium led by Morgan Stanley Infrastructure Partners and $305 million fundraise by GMR Energy from Temasek, IDFC Private Equity, Ascent Capital and others.
Another recent deal was Blackstone’s $300-million investment in Moser Baer Projects, which plans to commission 5,000 MW capacity by 2016.
GVK Group consolidated its power business under GVK Energy Ltd earlier this year, transferring its investment in GVK Industries Ltd, GVK Gautami Power Ltd, GVK Power (Goindwal Sahib) Ltd and Alaknanda Hydro Power Company Ltd. These units have 901 MW of operational assets with nearly 2,500 MW under various phases of construction and development across gas-fired, thermal and hydel assets.
Actis closed its emerging markets infrastructure fund at $750 million last year and also invests through $2.9-billion Actis Emerging Markets 3. The PE firm had formed a $200-million joint venture with Tata Realty & Infrastructure to bid for road projects earlier this year.
GVK may also look for consolidating its holdings in power projects with this funding besides for financial closure for upcoming projects. While GVK Industries, GVK Power (Goindwal Sahib) Ltd and Alaknanda Hydro Power are wholly owned units, the group holds a 64% stake in GVK
Gautami Power, which manages a 464 MW gas-based plant.
GVK acquired a 9.50% additional stake in GVK Gautami Power Ltd from Nagarjuna Construction to increase its holding in March this year. The balance stake in unit is held by Malaysia’s IJM, and Maytas Infra Ltd.
Several of its operational units are also reporting revenues and are profitable. GVK Industries, which has 437MW operational under two phases, reported combined revenues of Rs 205 crore first quarter of this fiscal. It is developing another 800MW capacity under phase III. GVK Gautami Power, which is also developing another 800MW under phase II, reported revenues of Rs 238 crore for first quarter FY11.
GVK is alo reportedly in talks with PE firms to raise funds for GVK Airport Development Private Ltd, which holds its investments in Mumbai International Airport Ltd and Bangalore International Airport Ltd. A Reuters report said In October month that GVK is in talks to raise around $250 million to $300 million from Standard Chartered PE, Morgan Stanley’s infrastructure fund, and TPG Capital.