Infrastructure developer DS Constructions Pvt. Ltd that acquired Houston-based Globeleq’s 2180MW power generation assets in South America, Central America and the West Indies in June plans more overseas acquisitions and hopes to make an initial public offering of its shares by 2010.
In the current year, the company plans to acquire hydroelectric and thermal power projects with a capacity of around 300MW in South America and Canada at the cost of Rs300 crore.
“We may acquire these power projects independently or in association with another company. We are exploring possibilities for taking over projects in the power sector and plan to complete the process within this financial year (2007-08),” said Rafi Qadar Khan, general manager, DS Constructions Ltd. He declined to divulge the name of the projects or the companies.
In June, the company and Israel Corp., equal partners in a joint venture, paid $542 million for Globeleq’s projects in Peru, Bolivia, El Salvador, Dominican Republic, Guatemala, Nicaragua, Panama and Jamaica.
“The joint venture company (forged) with Israel Corp. plans to be a major player in the global power sector and would be looking at acquiring more power assets in the near future,” M.S. Narula, the managing director of DS Constructions had said at the time of the Globeleq’s asset acquisition.
DS Constructions currently is building highways, expressways, railways, hydro power projects and special economic zones at a total project cost of Rs26,000 crore.
Explaining the rationale behind focusing on Canada and South America, Khan said that these were regions where the company had discovered “power projects available for sale.”
Shubhranshu Patnaik, an executive director at audit firm PricewaterhouseCoopers, said that managing assets overseas will be a huge challenge.
“DS acquisition of Globeleq’s assets came as a surprise to everyone as it was a pretty aggressive bid. However, cross-border challenges are extraordinary and varies from country to country. One needs to have a coherent strategy to meet these challenges,” Patnaik added.
DS Constructions currently has a power generation capacity of 3400MW which it plans to increase to 10,000MW by 2015. The company is taking the inorganic route as this will help it add capacity rapidly. “In order to become a 10,000MW company, we plan to invest Rs50,000 crore in the power sector,” Khan said.
DS plans to bid for a 4,000MW ultra mega power project and is in talks with state-owned power equipment maker Bharat Heavy Electricals Ltd to form a consortium to do this. The company is also interested in bidding for two thermal power projects of 1200MW each in Punjab.