Clear Investments , PFC to float $1 bn PE fund
US' Clear Investments & Power Finance Corp will float a $1 bn private equity fund for the Indian power sector.
By Nevin John, TNN |
MUMBAI: US-based Clear Investments and government-owned Power Finance Corp (PFC) have joined hands to float a $1-billion private equity fund for the Indian power sector. Their plan is to increase the size of the fund to $10 billion by 2012 with the sector entering the boom phase in the country.
PFC, which was appointed as the advisory to the investments, has evinced interest in picking up 20% stake in the power fund. PFC has submitted a letter of intent (LoI) to invest $200 million, according to Deepak Kavadia, managing director of the parent company Clear Trade.
The fund, which has an advisory board in India, will invest $250 million to pick up stake in Indian power companies through pre-public offering by March 2008, said Mr Kavadia.
Clear Trade has already committed around $150 million in India. “The company plans to increase the size of the fund to $10 billion by 2012. As the power sector picks up momentum, this is the right time to make an investment. We are expecting a double return from the sector, which is facing severe shortage in power generation capacity,” said Clear Trade chief executive officer Palak Jain.
The company also plans to float another $2.5-billion dedicated infrastructure fund for the sector. The infrastructure fund will be operational from next year. Hospitality and airport will be the prime areas of investments for the company. Initially, the company will look at projects in tier-II cities for investment.
Former NTPC chairmen AK Sah and PS Bami and former ITC chairman KL Chugh are directors of the advisory committee of the power fund.
By keeping the goal of providing power to all by 2012, the government plans to add up to 80,000-megawatt (MW) capacity under the 11th Five-Year Plan. India is planning to add 8-lakh MW by 2030. With the country facing a power shortage of 22,000 MW, the importance of power generation firms will be significant in the coming years, said industry analysts.
PFC, which was appointed as the advisory to the investments, has evinced interest in picking up 20% stake in the power fund. PFC has submitted a letter of intent (LoI) to invest $200 million, according to Deepak Kavadia, managing director of the parent company Clear Trade.
The fund, which has an advisory board in India, will invest $250 million to pick up stake in Indian power companies through pre-public offering by March 2008, said Mr Kavadia.
Clear Trade has already committed around $150 million in India. “The company plans to increase the size of the fund to $10 billion by 2012. As the power sector picks up momentum, this is the right time to make an investment. We are expecting a double return from the sector, which is facing severe shortage in power generation capacity,” said Clear Trade chief executive officer Palak Jain.
The company also plans to float another $2.5-billion dedicated infrastructure fund for the sector. The infrastructure fund will be operational from next year. Hospitality and airport will be the prime areas of investments for the company. Initially, the company will look at projects in tier-II cities for investment.
Former NTPC chairmen AK Sah and PS Bami and former ITC chairman KL Chugh are directors of the advisory committee of the power fund.
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Indian power generation firms are on a fund-raising spree. At least half-a-dozen majors, including Reliance Power, Sterlite Energy, JSW Energy, Essar Power and Ispat Energy, will raise around $10 billion from the primary market and through pre-IPO placements in 2008 by offloading equity. These companies have already begun talks with global private equity funds for pre-IPO placement, which, in turn, gives the company a better valuation and help in price discovery.By keeping the goal of providing power to all by 2012, the government plans to add up to 80,000-megawatt (MW) capacity under the 11th Five-Year Plan. India is planning to add 8-lakh MW by 2030. With the country facing a power shortage of 22,000 MW, the importance of power generation firms will be significant in the coming years, said industry analysts.
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