GVK joins the Private Equity party | Energy Infrastructure

GVK Power and Infrastructure Ltd closely follows GMR Infrastructure in projects, businesses and now even planning and financial closure. Both India’s private sector infrastructure plays started life in construction and even graduated to 250 MW power plants together till 2007 when nothing other than roads andpower went to a private sector portfolios and Airport infrastructure was first bid in the country. Some even hold GVKPIL in higher esteem and it holds the prestigious Mumbai and Bangalore Airport investments in its belt too, compared to GMR’s Delhi (T3 was just launched last month)

In line with the projectised requirements of this industry where revenue for each contract/ project is determined independently and sometimes based on the cost of funding for each project, GMR has already confirmed its projectised entity based financing model. In as much, no one can make out whos expet advice is being followed, there seems to be no conflict of interest as GVK also farms out its Energy projects to a new company as a subsidiary of GVK PIL

As Bloomberg reported on Friday,

GVK Power & Infrastructure Ltd., an Indian generator backed by T. Rowe Price Group Inc., plans to raise as much as 15 billion rupees ($326 million) selling a stake in its energy unit to boost generating capacity.

The builder of airports and power plants plans to sell securities that can be converted into equity of its unit, GVK Energy Ltd., Chairman G.V. Krishna Reddy said in an interview in Hyderabad, where the company is based. GVK is in talks with private equity firms for the sale, he said.

GVK joins Asian Genco Pte in seeking private equity funding as investors prepare to tap rising electricity demand in Asia’s second-most populous nation. India, ranked below Ivory Coast and Sri Lanka for the quality of infrastructure, plans to increase generation by 77 percent in the next seven years to reduce blackouts and drive the world’s third-fastest growing major economy.

Asian Genco was the largest PE deal of 2010 and GMR has finished three rounds of Qualified Institutional Placements after a mid crisis snafu in the first tranche in 2009 getting $425 million from Goldman Sachs Capital Partners, General Atlantic and others

Apart from the $326 million for Power in GVK Energy, GVK also plans to raise $1.1 billion for its continuing investments in Mumbai and Bangalore airports