Private equity investors in Central UP Gas Limited(CUGL), a joint venture between India’s two state controlled oil and gas majors GAIL (India) Limited and Bharat Petroleum Corporation Limited(BPCL), are looking to exit their three year old investment in the company, atleast two sources briefed with the matter told VCCircle.
While private equity firms IL&FS Investment Managers Ltd and IDFC Private Equity own 15 per cent stake each, Asian Development bank (ADB) owns about 20 per cent in the company that was set up for developing city gas distribution project in Kanpur.
Ernst & Young has been appointed as the banker for the transaction and the advisory firm is currently scouting for potential buyers. It has already invited bids from other mid-market private equity firms.
An email sent to CUGL spokesperson and Shyam Sundar SG, Senior Managing Director, IDFC Private Equity and on the board of CUGL did not elicit till the time of writing this article. An IL&FS PE spokesperson could not be immediately contacted.
“The initial set of investors are already sitting on 3x of their investment,” added a source with knowledge of the development.
CUGL that was set up in 2005 and currently operates in Kanpur and Bareilly. According to VCCedge, the financial research platform of VCCircle, the company had revenues of about Rs 65 crore for FY11. It is operating at huge EBITDA margin of about 48 per cent and the expected revenues for FY12 is in the range of Rs 80 crore.
Several gas utility companies have raised private equity funding in the past. IDFC Private Equity THAT had previously also invested in Gujarat State Petronet exited the company in 2009 with over 3x returns. The PE firm has also invested in Krishna Godavari Gas Network and Maharashtra Gas Network Ltd.
IL&FS Investment Managers, that happens to the largest domestic PE firm in terms of assets under management, has also backed other companies in the sector including Indraprastha Gas Ltd.
In 2010, IFCI Venture Capital Fund, UTI India Infrastructure and IDFC Project Equity invested in Sabarmati Gas.