GVK Energy, the energy arm of Hyderabad-based GVK Power and Infrastructure (GVKPIL), is close to sealing a private equity deal where 3i India Infrastructure Fund will invest around Rs 1,200 crore in it, sources said.
The dedicated infrastructure fund, promoted by UK-based 3i, is likely to get around 20 per cent stake in the company. An announcement is likely tomorrow. Actis, the US-based private equity firm, is also known to be planning to invest in the company through the infrastructure fund.
GVK did not respond to an e-mailed query, while Anil Ahuja, Head-Asia, 3i refused to comment.
Sources say GVK would use these funds to invest in the various power projects it is currently developing. An expanded equity base would give the company room to raise debt for its projects.
This deal values the energy unit of the company at Rs 6,000 crore. The parent company, GVKPIL, which is operating the airports in Mumbai and Bangalore, and has interests in road projects; has a market capitalisation of Rs 7,051 crore, according to data with the Bombay Stock Exchange.
GVK Energy currently has a power generation capacity of 901 Mw, but has plans to rapidly expand its capacity, especially in gas-fired power generation, fuelled by the discovery of natural gas in the Krishna-Godavari basin.
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It is expanding the capacity of its 264-Mw, gas-based, plant in Jegurupadu, Andhra Pradesh, to 1,064 Mw. It is also expanding yet another gas-fired power plant in Andhra, Gautami Power, from 464 Mw to 1,264 Mw.
GVK is also developing a 600-Mw, coal-based power plant in Goindwal Sahib, Punjab. The company also made forays into hydel power and is setting up two hydel power projects in Uttarakhand — a 330-Mw unit in Rishikesh and a 370-Mw plant at Gauriganga.
This would be one of the largest investments made by the $1.2-billion, 3i India Infrastructure Fund after it was established in 2007. It has already invested $227 million in Adani Power, and $101 million investment in Soma Enterprises, a road infrastructure company, in 2007. It had also invested $161 million in the Krishnapatnam port in Andhra in 2009.