KVK Group plans to raise $100 mn from UK's AIM

NEW DELHI: Hyderabad-based KVK Group is raising $100 million through London’s AIM. The company plans to pump in Rs 400 crore into various power ventures which are under its privately-held group holding company KVK Energy & Infrastructure (KEI).

The funds would be raised by a new firm, S&S Infrastructure Holdings, which would then pick up direct equity stake of 70.3% in KEI in addition to convertible preference shares in the company.

KEI, in which Citigroup-owned US hedge fund Old Lane holds 15.7% equity stake, currently has equity stakes in various power projects under implementation with a cumulative capacity of 2,350 MW.

While it has minority stakes in a few power projects, in others it has a substantial equity stake of 50% or more. Among the large projects in which it holds a large equity stake include the two-phased 1,300 MW Orissa’s KVK Nilachal Power and 300 MW coal-based Nagai Power located in Tamil Nadu. These apart, it is also the minority partner in 600 MW Lanco Amarkantak Power and in a couple of hydel power projects in Karnataka.

According to a source, S&S Infrastructure, a Mauritius-based firm, is in the process of raising $100 million or about Rs 400 crore from AIM through an initial public offer which would be pumped back into KEI.

The firm would bring in Rs 137.9 crore for 70.34% equity stake and would also infuse Rs 262 crore more through convertible debentures or preference shares. Upon conversion into equity S&S Infrastructure’s stake shall go up to 94%.

After S&S Infrastructure acquiring majority stake in KEI, Old Lane’s equity in the company would come down to 4.66% from the existing 15.72%. It would, however, continue to hold 34 million convertible preference shares and 93 million convertible debentures, which could potentially give it a higher equity in the company when converted.

Currently, Maruti Finance, which is the ultimate holding company of the KVK group led by first generation entrepreneur K Vijay Kumar, holds 75.29% equity in KEI. This holding company’s equity stake would come down to 22.33% after the infusion of funds by S&S Infrastructure. Maruti Finance’s holding in KEI would drop further post conversion of securities into equity in favour of S&S Infrastructure and Old Lane.

Besides the projects under implementation, K Vijay Kumar has small existing power generation ventures including a majority stake in 15 MW biomass based plan at Chhattisgarh and an 11 MW natural gas- based captive power plant at Tamil Nadu.

It also has 50% stake in Kasargod Power Corp in Kerala which is promoted jointly with KSK Energy Ventures, which is part of the first India-focused power project development and investment firm listed on AIM. In addition, KEI also holds 50% stake in RVK Energy which has a natural gas based power generation unit in Andhra Pradesh promoted jointly with Caterpillar Power Ventures and KSK Energy Ventures.