India Venture Advisors, a private equity firm promoted by the Piramal group, is investing Rs 50 crore in Gurgaon-based infrastructure player C&C Constructions Ltd. The PE firm is investing through subscription of five crore compulsory convertible preference shares of Rs 10 each in the listed firm. C&C Constructions is mainly an EPC (engineering, procurement and construction) firm in the roads and highways space.
"They (C&C Constructions) are performing very well as far as this sector is concerned. We believe in the company and think it should do well in times to come," said AK Purwar, chairman of India Venture Advisors. Purwar, who has joined the board of C&C Construction, is the former chairman of India's largest lender SBI and leads the private
equity business of the Piramals.
The company, which follows June to July financial year, reported revenues of Rs 750 crore and net profit of Rs 41 crore in FY09. For the first three quarters of FY10, C&C Constructions has reported revenues of Rs 767 crore and net profit of Rs 36 crore.
C&C Constructions has an order book of Rs 2,738 crore as on March 31, 2010. The roads & highways vertical currently contributes to over 52% of total pending order book, while the rest is from verticals like buildings and railways. C&C Constructions, which already has an order book from Afghanistan, also plans to get orders from Oman, Kuwait. It has also formed a partnership with Spanish firm, Isolux Corsan.
The shares of the company were trading at Rs 247 per share, down by 0.68% today. The company currently has a market capitalisation of Rs 452 crore.
The road sector has been increasingly attracting attention of private equity players. "This sector has a lot of potential and there a lot investments taking place in the road sector," said Purwar in a telecon with VCCircle.
India may require $1.7 trillion in the decade starting 2010 to meet infrastructure demand and keep pace with economic growth and urbanisation, said a report by Goldman Sachs. Of this, power and roads alone may require upwards of $700 billion.
In a recent large deal, private equity major Actis formed a $200 million joint venture with Tata Realty & Infrastructure to develop roads and highways. The government is also in discussions with Singapore state investor Temasek to set up a $2 billion road fund, said a report in Wall Street Journal last month.
Healthcare, Life Sciences Focus
India Venture Advisors is a healthcare and life sciences focused fund, with a 75% corpus dedicated to the segment. The PE firm made its debut deal last year by investing in Trichy-based specialty hopital firm Kavery Medical Centre and Hospitals. The investment in C&C Constructions is its second deal.
"We are a healthcare & lifesciences focused fund and we have a 25% window to invest outside these sectors," said Purwar.
In May, Piramal Healthcare sold its domestic formulations business to NYSE-listed pharma major Abbott Labs for an up-front payment of $2.12 billion, plus $400 million annually for the next four years. The firm also divested its diagnostics business to Super Religare Laboratories for Rs 600 crore.
India Venture Advisors eyes deal sizes of anywhere between Rs 30 crore to Rs 60 crore. The PE firm expects to close more deals in the coming months.