I Squared Capital invests $200 mn in Singapore-based AG&P City Gas

AG&P City Gas is developing twelve city gas distribution networks in India

After showing interest in Bharat Petroleum Corporation (BPCL) stake sale through its arm Think Gas, private equity major I Squared Capital has invested approximately $200 million in Singapore-based AG&P City Gas, which is developing twelve city gas distribution networks in India.

The investment has been made through ISQ Global Infrastructure Fund III and ISQ Growth Markets Infrastructure Fund, as a first tranche of a $300 million equity raise in AG&P City Gas. I Squared Capital said it is planning to deploy up to $1.3 billion as capital expenditure to develop the distribution networks. AG&P City Gas is present in India under the brand name AG&P Pratham. AG&P City Gas was previously wholly-owned by the Atlantic, Gulf & Pacific Group (AG&P), a Singapore-based downstream liquefied natural gas business.

“Along with AG&P, I Squared Capital was one of the early foreign institutional investors in the Indian city gas sector and is committed to helping the country achieve its target of having 15 percent of natural gas in its primary energy mix by 2030. We plan to deploy up to $1.3 billion in Capex to build out the distribution networks,” noted Gautam Bhandari, managing partner at I Squared Capital.

In its twelve concessions, AG&P City Gas is responsible for developing and operating Compressed Natural Gas (CNG) stations for vehicles, piped natural gas to homes, and the distribution of Liquid Natural Gas (LNG) to industrial and commercial customers. City gas projects benefit from marketing exclusivity in their designated areas for 8-10 years and construction exclusivity of related infrastructure for 25 years.

“AG&P is privileged to partner with I Squared Capital to expedite the roll-out of these vital gas networks being developed in India by AG&P City Gas. AG&P City Gas will simultaneously continue to build 1,500 CNG stations. AG&P City Gas will give the opportunity for small and large local companies to use cleaner and more affordable natural gas, mostly for the first time, a big competitive advantage for the Government of India’s ambitious Atmanirbhar (self-reliant) India program,” said Joseph Sigelman, chairman and chief executive officer of AG&P Group.

I Squared Capital's arm Think Gas is in the race to buy the government's stake in BPCL, which is also in the CGD space. Think Gas is operating in areas like Ludhiana, Jalandhar, Barnala, Moga, Kapurthala, SBS Nagar in Punjab; Baghpat in Uttar Pradesh; Bhopal, Rajgarh, and Shivpuri in Madhya Pradesh; and Begusarai in Bihar.

“The transaction builds upon I Squared Capital’s experience in developing city gas infrastructure in India through its THINK Gas platform. The concessions cover some of the fastest growing cities in India such as Jodhpur, Kanchipuram (including what is Southern Chennai), Mysore and Thiruvananthapuram (otherwise known as Trivandrum). AG&P City Gas and THINK Gas are geographically complementary and will operate as independent companies with separate management teams,” said Harsh Agrawal, partner at I Squared Capital based in Singapore.

“These two companies form one of the largest private city gas portfolios in India with eighteen concessions serving approximately 85 million people across nine states with a planned capital expenditure of over $1.3 billion for AG&P City Gas. I Squared Capital will employ the same global best practices and smart technologies that we used for the rapid and successful development of our THINK Gas platform over the last four years,” he said.