Mumbai: Piramal Enterprises Ltd, controlled by billionaire Ajay Piramal, plans to invest Rs.10,000 crore from its structured finance group in infrastructure and other sectors over the next few years, said a senior executive.
This includes $1 billion in the joint venture of Piramal Enterprises and Dutch pension fund asset manager APG Asset Management NV, announced in July 2014.
“We want our gross book to be Rs.10,000 crore in (the) next three to five years, and apart from infrastructure, we are looking across sectors for lending,” said Jayesh Desai, co-head of the structured investments group at Piramal Capital, in an interview on 19 July. Piramal Capital is the financial services arm of Piramal Enterprises.
In April, the group hired Shantanu Nalavadi from private equity fund New Silk Route Advisors Pvt. Ltd to spearhead structured investment deals; Desai will look after transactions in the infrastructure space.
The structured investment group will look at deals in the education, healthcare and other sectors with an ideal ticket size of more than Rs.250 crore.
In infrastructure, the focus may shift away from roads, where Piramal has signed a memorandum of understanding with SBI Capital Markets Ltd to acquire controlling stakes in road projects.
“We are focusing on mezzanine and structured deals in the infrastructure space right now and if road deals come our way then we will look at it, but we are not chasing those deals,” Desai said.
Deals in the infrastructure space could range between Rs.500 crore to Rs.1,000 crore, although they could be larger than that if required, he added.
In March, Priamal Enterprises closed a Rs.900 crore structured finance deal with the GMR Group, the first deal from the company’s joint platform with APG Asset Management NV.
In April 2013, Piramal Enterprises invested Rs.425 crore in Hyderabad-based Navayuga Road Projects Pvt. Ltd and Rs.500 crore in Green Infra Ltd, a renewable energy firm promoted by private equity fund IDFC Alternatives Ltd.
On 15 July, The Economic Times reported that Piramal Enterprises could invest Rs.300 crore in Chennai-based renewable energy company ReGen Powertech Pvt. Ltd, which produces gearless wind turbines and recently introduced a line of central solar inverters.
According to data from VCCEdge, the financial research platform of VCCircle.com, since January, private equity funds have collectively invested $395.97 million across eight deals in the infrastructure sector.
“There are transactions on the table for infrastructure assets but deals are taking time to close. Those investors who came in the previous round of capital deployment have found it difficult to find exits, thus a lot of transactions are taking place through debt deals,” said Vishwas Udgirkar, senior director, infrastructure, at Deloitte Touche Tohmatsu India Pvt. Ltd.
An investment banker who advises infrastructure companies said there has been an increase in the number of deals in the power, renewable energy and road sectors since late last year.
“...though some global funds are keen on acquiring equity stake because of their long-term investment strategy, most fund managers are sticking with debt lending,” added the banker, requesting anonymity.
Global funds scouting for equity deals include Macquarie Infrastructure and Real Assets, which manages more than $100 billion in global assets through various funds, and infrastructure investment manager I Squared Capital, which recently closed a $3 billion fund, ISQ Global Infrastructure Fund.
Last week, Macquarie entered into a conditional share purchase deal to acquire Swarna Tollway Pvt. Ltd from Malaysian firm IJM Corp. Bhd for a total consideration of Rs.1,003 crore. It is also in talks with Hyderabad-based power generation company Ind-Barath Power Infra Ltd to invest Rs.750-780 crore.