PTC in talks to sell 11% in fin arm to SAIF
State-owned Power Trading Corp is in talks with private equity fund SAIF Partners of Hong Kong to sell up to 11% in unlisted unit - PTC Financial Services - in a deal that could be a precursor to its larger fund-raising ambitions.
MUMBAI: State-owned Power Trading Corp (PTC) is in talks with private equity fund SAIF Partners of Hong Kong to sell up to 11% in unlisted unit - PTC Financial Services (PFS) - in a deal that could be a precursor to its larger fund-raising ambitions.
“SAIF Partners may invest Rs 210 crore in PFS as negotiations are progressing to strike a deal at Rs 32-Rs 33 a share,” said a banker familiar with the transaction, adding that two other PE funds are also vying to buy a stake.
Two-year-old PFS, which plays the dual role of investor and financier in electricity generation and related assets, plans to raise Rs 750 crore in an initial public offering and private sale of shares, after which its parent’s stake will drop to 51% from 77.6%.
The company is looking to acquire coal blocks in Australia and Indonesia to feed thermal projects in India. PFS has appointed JM Financial, ICICI Securities and SBI Capital to manage the public issue.
SAIF India head Ravi Adusumalli was unavailable for comment as he is travelling abroad. PTC chairman Tantra Narayan Thakur didn’t elaborate, but said the company was looking to raise “some capital for PTC Financial”.
Financial services company Macquarie Capital, which is said to be advising PTC in the pre-IPO share sales, too is negotiating with a few PE funds to shed its 11.2% stake in PFS that it bought at Rs 16 a share two years ago.
Goldman Sachs owns the remaining 11.2% in PFS.PFS provides equity support to power projects and also invests in renewable energy projects such as wind farms and biomass units. The company has to date disbursed up to Rs 1,500 crore.
The interest of private equity players in PFS stems from the growing profitability of power trading and accompanying businesses that have returns topping 20%, said people tracking the sector.
Trading in the short-term market - a bilateral contract between buyers and sellers outside a power exchange - accounts for nearly 80% of the total electricity changing hands. The value of the short-term power market is estimated at Rs 20,000 crore.
“SAIF Partners may invest Rs 210 crore in PFS as negotiations are progressing to strike a deal at Rs 32-Rs 33 a share,” said a banker familiar with the transaction, adding that two other PE funds are also vying to buy a stake.
Two-year-old PFS, which plays the dual role of investor and financier in electricity generation and related assets, plans to raise Rs 750 crore in an initial public offering and private sale of shares, after which its parent’s stake will drop to 51% from 77.6%.
The company is looking to acquire coal blocks in Australia and Indonesia to feed thermal projects in India. PFS has appointed JM Financial, ICICI Securities and SBI Capital to manage the public issue.
SAIF India head Ravi Adusumalli was unavailable for comment as he is travelling abroad. PTC chairman Tantra Narayan Thakur didn’t elaborate, but said the company was looking to raise “some capital for PTC Financial”.
Financial services company Macquarie Capital, which is said to be advising PTC in the pre-IPO share sales, too is negotiating with a few PE funds to shed its 11.2% stake in PFS that it bought at Rs 16 a share two years ago.
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“Macquaire is also talking to SAIF to sell its stake,” said the banker. Goldman Sachs owns the remaining 11.2% in PFS.PFS provides equity support to power projects and also invests in renewable energy projects such as wind farms and biomass units. The company has to date disbursed up to Rs 1,500 crore.
The interest of private equity players in PFS stems from the growing profitability of power trading and accompanying businesses that have returns topping 20%, said people tracking the sector.
Trading in the short-term market - a bilateral contract between buyers and sellers outside a power exchange - accounts for nearly 80% of the total electricity changing hands. The value of the short-term power market is estimated at Rs 20,000 crore.
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“Business models in power trading are rich as funds have the flexibility to invest in upstream (coal mines) and downstream also, including trading,” said PricewaterhouseCoopers India energy leader Kameswara Rao. “The twin drivers for short-term power, including higher tariffs and fuel problems, will keep the sector attractive,” he added.Too busy to trade in stocks? Invest in Mutual Funds with ET Money!
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