Hyderabad-based infrastructure group GVK Group is negotiating with top private equity investors, including Blackstone, General Atlantic and Carlyle to raise upto $150 million, Financial Chronicle has reported. The report said Blackstone in particular is looking to pick up a stake in the listed company — GVK Power and Infrastructure (GVKPIL), which will set up a subholding company that will act as an energy vertical for five power companies of the group.The other PE funds are also keen on the energy vertical of GVK. However, the GVK management are not too keen on diluting stake in the listed entity. Blackstone already has an exposure to Nagarjuna Constructions, a leading Hyderabad based construction company.
GVK group is looking at two alternate financing options. One is to bring a PE firm in the energy vertical and the other option is raise funds in its hydropower subsidiary, which is a special purpose vehicle called GVK Power Alaknanda (setting up a 330 mw hydel plant in Uttarakhand).
One of the reasons why GVK may not dilute stake in the listed firm is due to the sharp fall in stock price compared to the average six month stock price – the mandatory price as per the Sebi formula for preferential allotments. The energy vertical will have under its umbrella five power companies that own and operate projects with a total capacity of 2,141 mw.
The move to bring in PE investors is part of group’s ongoing restructuring by bringing in few subsidiary companies under the listed entity. Early this month an associate company Gautami Power (GPL) allotted equity shares to GVKPIL which raised its holdings in GPL from 44.97 per cent to 51 per cent, turning GPL into a subsidiary. Similarly, GVKPIL had earlier acquired the entire equity of GVK Energy and GVK Developmental Projects, and made them wholly-owned subsidiaries.
The ongoing restructuring is the second such exercise by GVK which went public in 2006. In January 2007 GVK consolidated its infrastructure assets in power, airport, road and mining into GVKPIL, making it an integrated infrastructure player. Post-consolidation, Mumbai International Airport and GVK Jaipur Expressway came under GVKPIL. It was part of a plan to put all its infrastructure companies under one umbrella and enable GVK to position itself as an integrated infrastructure company to leverage emerging opportunities.
Besides PE firms GVK group is also in talks with the promoters of two power companies, who are setting up projects with capacities of 1,200 mw and 600 mw in which GVK may plan to buy a minority stake.