Hyderabad: Overseas power companies such as Suez Energy International are in a race to acquire a stake in the Navabharat Power Pvt. Ltd (NPPL), one of the power generation companies of the Hyderabad-based Malaxmi Group.
The group plans to dilute up to 49% in the subsidiary to raise Rs580 crore to part-fund a power project.
“Suez along with other overseas power sector players are interested in taking a strategic stake in NPPL,” said Y. Harish Chandra Prasad, chairman, Malaxmi Infra Ventures (India) Pvt. Ltd said. He declined to name the others in the fray.
“It is inevitable that Indian companies will need partners for the financial closure of (power) projects,” said Arvind Mahajan, executive director at audit firm KPMG. “The kind of money required for the power sector cannot be raised in India alone,” he added.
NPPL is a special purpose vehicle (SPV) floated by another Hyderabad based infrastructure company, Nava Bharat Ventures Ltd, and Malaxmi Group, to develop a 1,040 megawatt (MW) thermal power project in Orissa. The holding structure of the SPV is yet to be decided but Malaxmi will have the majority stake.
NPPL’s Orissa project may need an investment of Rs4,160 crore and the firm plans to achieve financial closure for this within the next six to nine months. Malaxmi plans to dilute 38% to 49% stake in the SPV, but intends to remain the single largest shareholder in it.
The unlisted Malaxmi group is currently implementing four projects with a total capital investment of $2 billion (more than Rs8,000 crore) of which its equity investment is around Rs700 crore. The group has thus far invested Rs20 crore of this.
“The money will be raised in phases through bank loans, private equity, strategic investors, non-resident Indians, friends and family. A lot of private equity funds have approached us,” Prasad had earlier said.
The group is also setting up a 540MW coastal thermal power project through its group firm Simhapuri Energy Pvt. Ltd and another Hyderabad based infrastructure firm, Madhucon Projects Ltd.
“Once these projects are commissioned, we will be in the big league and by 2012, we will be fairly comfortable in the infrastructure space. We will have a turnover of a little more than Rs1,000 crore by 2012,” Prasad said.