Hyderabad-based GVK Group, which has a diversified infrastructure portfolio in areas like power and airports, is in advanced talks with private equity majors 3i and Actis to raise up to $250 million to pump funds into its equity-guzzling businesses. GVK, which has an operating power power portfolio of 901 MW also operates two of India’s busiest airports Mumbai and Bangalore.
VCCircle has learnt that PE major 3i’s infrastructure fund is making a strong pitch to invest close to $200 million while Actis may come in as a smaller investor.
Sources familiar with the development said that 3i may likely be investing in GVK's power business. The funds may also flow in at the entity flagship level (the listed GVK Power & Infrastructure Ltd. VCCircle could not ascertain the exact structure of the deal while sources say, it could be in the form of convertible instruments.
In terms of its asset size, energy portfolio accounts for over 70% while airports constitute nearly 23%. The BSE-listed firm has so far raised close to Rs 2,000 crore through the qualified institutional placement route in two tranches in the last three years. The group’s energy portfolio—which is a mix of gas-fired, thermal and hydel assets—comprise 901 MW of operational assets, 870 MW under construction and 2,661 MW under development. This lineup will trigger equity calls from shareholders when these assets come up for financial closure. Typically, aggressive infrastructure companies raise capital opportunistically to chase inorganic options as also bid for new projects in the near term.
Sources familiar with the development say, GVK’s PE fund-raising exercise, where 3i and Actis are frontrunners, could cover the energy vertical as well given its dominance in the group’s operations.
Commenting on this information, GVK Group CFO Issac George told VCCircle, "We are looking at raising in the region of $250 million from private equity players. We have received interest from six to eight players. But, we have not finalised on any yet. We will take a call by early next month."
"We do not comment on deal speculation," said an Actis spokesperson. An email sent to 3i Group remained unanswered at the time of publication of this article.
India’s insatiable demand for energy has led to power assets gaining major traction in private equity play. Some of the major deals in this space include the $200-million investment by Singapore’s sovereign investor Temasek into GMR Energy, a company that can be labeled as the closest rival of GVK. The other mega deal has been the $425-million investment in Asian Genco by a slew of PE investors led by Morgan Stanley Infrastructure Partners.
The group has also bared its intentions of being a dominant player in both Mumbai and Bangalore airports where it now holds 37% and 29% respectively. Possibly, the fresh fund-raise is targeted at claiming majority control in both these airports. In an earlier interview to VCCircle, soon after picking up the initial 12% stake in Bangalore International Airport Ltd, Mr George had said, “We are not a financial investor. We are a strategic investor. If the numbers make sense, we will look at ramping up our shareholding in the company.” For the Mumbai airport modernisation, the firm has already tied up debt to the tune of Rs 4,231 crore while the equity commitment comes to Rs 1,200 crore of which Rs 600 crore has already been infused.