GVK may spin off energy business into separate co
City-based nfrastructure major GVK Power & Infrastructure is planning to hive off its energy vertical into a separate company, ahead of a possible initial public offering (IPO) for the proposed company
By Nishita Saxena, TNN |
HYDERABAD: City-based nfrastructure major GVK Power & Infrastructure is planning to hive off its energy vertical into a separate company, ahead of a possible initial public offering (IPO) for the proposed company. The ground-work for the hive-off has begun, with the company bidding for oil blocks in the seventh round of the new exploration licensing policy (NELP). But plans for the IPO of the proposed new company is yet to be finalised.
���We are planning an equity carve-out for the energy vertical to be called GVK Energy. This vertical will be hived off as a separate sub-holding company so that it can cater to specific investors who would like to invest only in the energy sector instead of the diversified power and infrastructure portfolio. Currently, the energy vertical is wholly owned by GVK Power and Infrastructure���, said GVK Power and Infrastructure chief financial officer A Issac George.
An equity carve-out happens when a company decides to launch an IPO for one of its subsidiaries or divisions. The IPO is usually preceded by an equity infusion by private equity funds. Many infrastructure companies are following this route to give share holders a better investment choice.
The asset base of the energy vertical is expected to touch Rs 12,000 crore after the completion of projects in the pipeline. GVK Power and Infrastructure is executing six power projects and two coal mine projects. It now wants to have a slice of the pie in oil and gas exploration as well and has hence bid for a couple of oil blocks under NELP VII.
The NELP is meant to boost the pace of hydrocarbon development in the country. A total of 57 blocks are on offer for exploration of oil and gas under NELP-VII, where domestic and foreign private operators have been provided fiscal and contract terms on par with national oil companies for the offered acreages.
���We are betting big on deep water analysis, shallow water analysis and on land analysis. The cost per block is worth $500 million for deep water, $350 million for shallow water and $150 million for on land analysis,��� he said.
Ahead of a possible IPO, the company will have a round of equity infusion for the proposed sub-holding company. ���This will expand the energy vertical enormously,��� he said. Besides the oil and gas exploration, the company also hopes to bag contracts to execute the metro railway projects.
���We are planning an equity carve-out for the energy vertical to be called GVK Energy. This vertical will be hived off as a separate sub-holding company so that it can cater to specific investors who would like to invest only in the energy sector instead of the diversified power and infrastructure portfolio. Currently, the energy vertical is wholly owned by GVK Power and Infrastructure���, said GVK Power and Infrastructure chief financial officer A Issac George.
An equity carve-out happens when a company decides to launch an IPO for one of its subsidiaries or divisions. The IPO is usually preceded by an equity infusion by private equity funds. Many infrastructure companies are following this route to give share holders a better investment choice.
The asset base of the energy vertical is expected to touch Rs 12,000 crore after the completion of projects in the pipeline. GVK Power and Infrastructure is executing six power projects and two coal mine projects. It now wants to have a slice of the pie in oil and gas exploration as well and has hence bid for a couple of oil blocks under NELP VII.
The NELP is meant to boost the pace of hydrocarbon development in the country. A total of 57 blocks are on offer for exploration of oil and gas under NELP-VII, where domestic and foreign private operators have been provided fiscal and contract terms on par with national oil companies for the offered acreages.
���We are betting big on deep water analysis, shallow water analysis and on land analysis. The cost per block is worth $500 million for deep water, $350 million for shallow water and $150 million for on land analysis,��� he said.
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Ahead of a possible IPO, the company will have a round of equity infusion for the proposed sub-holding company. ���This will expand the energy vertical enormously,��� he said. Besides the oil and gas exploration, the company also hopes to bag contracts to execute the metro railway projects.
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