Aditya Birla Private Equity to pick up 8% stake in Indian Energy Exchange Ltd for Rs 136 Crore

MUMBAI: Aditya Birla Private Equity fund, owned by billionaire Kumar Mangalam Birla, will purchase an 8% stake in Indian Energy Exchange Ltd (IEX), India’s largest electricity exchange by volume, for Rs 136 crore, valuing it at Rs 1,700 crore, two persons with direct knowledge of the development said.

The investment reflects the renewed interest in India’s power sector as the new government is expected to push reforms to help companies build power plants and facilitate access to coal after delays in various regulatory clearances and lack of fuel supplies hit the sector hard in the past few years.
“Investors expect the power sector to turn around soon and volumes on the exchange have been rising in the past few months,’’ said one of the two persons cited above.

The Birla PE fund earlier purchased a 3% stake in the Bombay Stock Exchange, Asia’s oldest, and a 1% stake in Ratnakar Bank, which is now planning a public offer. The fund is said to be buying the stake from IDFC Private Equity. Bharat Banka, Birla PE managing director, did not respond to calls on his mobile phone. SN Goel, IEX managing director and CEO, declined to comment.

The trading volumes of renewable energy certificates or RECs on the IEX, which commands roughly 80% market share, doubled in July with more than 72,300 non-solar certificates changing hands. “This trading session witnessed increased volumes of traded RECs over the previous months with the trade of 72,321 nonsolar and 1,983 solar RECs,” IEX said in a statement on July 31. In June, 36,147 non-solar and 797 solar RECs were traded. One REC is equivalent to 1 mega watt for every hour of energy generated from renewable sources.

The trading session for RECs in July featured 770 market participants and of them, 610 entities participated in the nonsolar segment. Power traded on the exchange rose to 2.6 billion units in June from 2.3 billion units in May as a delayed monsoon saw mercury levels shooting up in many parts of the country, leading to a surge in demand.The daily average cleared volume in June rose to 87 million units, up from 76 million units traded in May.

IEX was started by Financial Technologies group founder Jignesh Shah, under investigation for the National Spot Exchange Ltd payment crisis. It’s now owned by private equity funds such as Multiples Alternate Asset Management, Bessemer Venture Partners, Lightspeed Venture Partners, India Value Fund and state-government companies including Power Trading Corp. and Rural Electrification Corp. Indian power companies Adani Enterprises, Jindal Power, Lanco Infra, Reliance Infra and Tata Power together own a5% stake in the exchange.