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New Delhi: PTC India Ltd has ended its alliance with the UK-based investment management firm Ashmore Group Plc in the $1 billion (Rs 5,100 crore) PTC Ashmore India Energy Infrastructure Fund and is in separate talks with at least three companies to find new partners.

“The association didn’t work as Ashmore was unable to bring in overseas investors for the fund. We are now working on other options and talking to three-four companies to partner us for the fund," said a senior PTC executive on condition of anonymity.

The $1 billion fund had also started approaching potential investors such as pension funds.

The fund was also a part of the largest private equity deal in India’s power sector and had plans to invest $60 million in a consortium that had committed to investing $425 million in Asian Genco Pte Ltd. The consortium was led by Morgan Stanley Infrastructure Partners and included General Atlantic Llc, Goldman Sachs, Norwest Venture Partners and Everstone Capital. Mint had reported on 13 February 2007 about the plans for the fund’s formation.

“We didn’t invest the money. It was Ashmore who separately invested in Asian Genco," the person cited above added.

IIFL Institutional Equities said in a 14 March report: “The management explained that due to differences in operational issues, its JV (joint venture) with Ashmore was called off and it is scouting for a JV partner to set up a power fund. This fund would initially have a capital of $200 million (100% equity), and on successful operational record would look forward to raise debt/third-party contribution."

Questions emailed to Ashmore on Wednesday remained unanswered till press time.

IIFL Institutional Equities said in its report that PTC was “taking (a) cautious approach on diversification initiatives". The firm, one of the promoters of Indian Energy Exchange Ltd (IEX), has plans to sell part of its stake in the bourse, retaining a minority 5%. As part of the exit plan, Renuka Ramnath’s Multiples Alternate Asset Management will buy PTC’s 14.5% stake in IEX.

This comes at a time when the demand for traded power is faltering due to the inability of state electricity boards (SEBs) to buy costly electricity. SEBs across India are saddled with losses because of power theft, technical losses during transmission and distribution, and billing inefficiencies. The political compulsion of providing free power to farmers has also had an impact on SEBs.

Reinforcing infrastructure is key to achieving the government’s target of 9% annual growth and energy supply has to grow 6.5% per year to achieve that level of growth in the gross domestic product.

India has an installed power generation capacity of 190,593 megawatts (MW) and plans to add around 75,000MW during the 12th Five-Year Plan (2012-17).

“Outlook on the company’s long-term volumes (via the pipeline of power purchase agreements signed) is not encouraging due to the current situation where the power sector is in a proverbial quagmire," Spark Capital Advisors (India) Pvt. Ltd said in a 27 February report.

Even as India’s power sector is struggling with a shortage of capital, with the power ministry estimating that $400 billion of investment will be required during the 12th Plan, the government is optimistic about raising the $1 trillion required for investment on public works during the period, according to the Economic Survey presented in Parliament last week.

utpal.b@livemint.com

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