PTC plans SPV to fund equity investments

In a first-of-its-kind venture in the field, the Power Trading Corporation of India plans to set up a special purpose vehicle (SPV) for financing equity investments in power generation projects.

The company's board has approved the proposal and a new entity will be set up by December this year.

"The proposed company will have an authorised capital of Rs 300 crore. The PTC will have a 51 per cent stake in the new company," Chairman and Managing Director Tantra Narayan Thakur told Business Standard. The company plans to get the approval in its annual general meeting that will be held in July.

The PTC will take around 15 per cent equity stake in upcoming power generation projects via the SPV. Earlier, it had picked up an 11 per cent stake in the 300-Mw Lanco Amarkantak project in Chhattisgarh.

"Taking equity in a company through PTC is a constraint," Thakur said. The SPV is being created because the company cannot take more than 60 per cent of its net worth in equity without the general body's approval.

It believes that equity participation will help in credit enhancement of the proposed power generation projects, which will further aid earlier financial closure.

Explaining the viability and success of the proposed venture, Thakur said, "Developers of most of the power projects from where PTC will offtake power have desired its equity participation."

This move will help the PTC make inroads into the surplus capacity of captive power plants' base. Using the SPV as a jumping board, the company is exploring possibilities for taking part in group captive-power generation projects as well.

"PTC, through the SPV will organise equity up to 49 per cent for group captive projects," Thakur said.