GVK taps PEs for airport, energy arms

GVK Power and Infrastructure is in talks to bring as much as $600 million (about Rs 3,688 crore) in private equity funding into two of its businesses, according to several sources with direct knowledge of the matter.

Private equity firms, including an investment arm of Standard Chartered, Morgan Stanley’s infrastructure fund, and TPG Capital, were in talks to invest between $250 million and $300 million, sources said


The Hyderabad-based company would offer roughly a 30 per cent stake in its airport business to private equity investors, said sources, who declined to be named as they were not authorised to speak to the media.

GVK, which was developing airports in Mumbai and Bangalore, plans to bid for a proposed international airport in New Mumbai and will also seek opportunities overseas, its Vice-Chairman G V Sanjay Reddy said last week. The company was constantly looking at raising cash to fund its expansion plans, he had said.

Separately, GVK had secured “in-principle” agreement to raise $280 million by selling stakes in its energy business to British private equity firms 3i Group and Actis, a source with direct knowledge of the situation said.

Another source, with knowledge of the transaction, said the total private equity investment in the energy business could be roughly $300 million, and a deal was likely to be closed before the end of the year. Both Actis and 3i would invest equal amounts in the energy business, sources said.

“The process is going on and if all goes well we should close the transaction before the year end,” one of the sources said.

A GVK spokesman declined to comment. Officials at 3i, Actis, Morgan Stanley and Standard Chartered also declined to comment. TPG Capital did not respond to an e-mail seeking comment.

Private equity boom
GVK, which has power units with over 900 Mw of capacity, planned to use proceeds from the sale of a stake in the energy business to expand capacity up to 4,500 Mw by 2013-14, its Chief Financial Officer Issac George said last month. The firm intends to list GVK Energy “over a period of time”, he had said.

Kotak Mahindra Capital, an arm of private sector lender Kotak Mahindra, was advising GVK on raising private equity investment for the airport business, sources said. Officials at Kotak Mahindra could not immediately be reached

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SUMIT KUMAR

Executive at India Electron Exchange

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