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Business News/ Companies / Macquarie loosens purse strings for Indian infrastructure assets
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Macquarie loosens purse strings for Indian infrastructure assets

The firm is investing Rs750-780 crore in a subsidiary of Ind-Barath Power, its second transaction in India this year

Across the two deals this year, Macquarie will end up investing more than Rs1,700 crore. Premium
Across the two deals this year, Macquarie will end up investing more than Rs1,700 crore.

Macquarie Infrastructure and Real Assets (MIRA), which manages over $100 billion in global assets through various funds, is set to close its second investment in India this year.

MIRA, through its investment arm, is investing 750-780 crore in a subsidiary of Ind-Barath Power Infra Ltd, a Hyderabad-based power-generating company, said two people directly familiar with the development.

“This would be Macquarie’s first investment in a power asset in India this year. This is a secondary transaction, where the two existing private equity investors in the company will get an exit, which includes 3i Infrastructure fund," said the first person mentioned above.

Macquarie, 3i and Ind-Barath Power Infra declined to comment.

Ind-Barath Power is backed by some large private equity funds, such as Sequoia Capital, Bessemer Venture Partners, Ascent Capital (erstwhile UTI Ventures) and The Rohatyn Group (which was earlier Citi Venture Capital International).

The firm’s website says it has a portfolio of nine projects in operation and another three projects under development. Across these projects, a capacity of 713 megawatts (MW) is under operation and 2,865MW under development. The projects are based on a variety of fuels such as coal, gas and renewable energy sources, it said.

In December 2014, Mint had reported that Ind-Barath was looking to raise 1,000-1,500 crore through a public listing to provide an exit to some of its existing investors. The firm, however, has not gone ahead with the plan yet. 3i Infrastructure had in March 2011 invested $45 million for a minority stake in Ind-Barath Energy (Utkal) Ltd, which is building a 700MW coal-fired plant in Odisha.

“The stake sale is expected to close by the end of this month and this would be done by Macquarie which has aggressively started to look at assets in India," said the second person cited earlier.

“Investment in thermal power is gaining favour as forecasts suggest a strong need for new base-load generation capacity in about three years’ time. The risks are lower as land acquisition and pre-development activities have been completed," said Kameswara Rao, partner at PricewaterhouseCoopers India.

If closed, this will be the second Indian transaction for Macquarie this year. Earlier last week, Malaysian firm IJM Corp. Bhd entered into a conditional share purchase agreement to sell its stake in Swarna Tollway Pvt. Ltd to MAIF Investments India through its various subsidiaries for a total consideration of 1,003 crore. The disclosure was made by IJM Corp. to the Malaysian stock exchange.

MAIF is an investment vehicle for Macquarie, according to the 2014 annual report of Macquarie International Infrastructure Fund Ltd. Across the two deals, Macquarie will end up investing more than 1,700 crore.

Till 2013, Macquarie invested in India through two infrastructure funds—Macquarie-SBI Infrastructure Fund (MSIF) and SBI-Macquarie Infrastructure Trust (SMIT), joint ventures between State Bank of India, Macquarie and International Finance Corp. MSIF and SMIT have committed capital of approximately $910 million and $260 million, respectively. According to data from VCCEdge, the funds made two investments in 2013, acquiring a 74% stake in GMR Jadcherla Expressways Ltd for 206 crore and Trichy Tollways Pvt. Ltd for almost 275 crore. The funds haven’t made any investment since then. Other investments of these funds include GMR Airports, Viom Networks, Adhunik Power and Natural Resources.

There has been a pickup in activity among other infrastructure-focused funds as well.

Global infrastructure investment manager I Squared Capital, which recently closed a $3 billion fund called ISQ Global Infrastructure Fund, is also close to finalizing its second investment in India and is evaluating an investment in NCC Ltd’s UP Tollway project, Mint reported on 10 July.

“Now, we are starting to see deals happen, which is a sign of clearance beginning to come through, and some amount of debt restructuring is happening and therefore the projects are becoming investable. Also, equity investors are becoming more reasonable on valuations," said Manish Agarwal, leader, infrastructure and capital projects, PricewaterhouseCoopers India.

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Published: 27 Jul 2015, 12:52 AM IST
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