Mubadala Investment, sovereign wealth fund of the United Arab Emirates, and a couple of Japanese investors including Sumitomo are in the race to acquire a 30% stake in Indian natural gas distribution business of I Squared Capital.
The deal is likely to value the business at $1 billion, multiple people aware of the development said.
I Squared, a US private equity firm focused on infrastructure investments, is present in the city gas distribution business in India through Think Gas Distribution and AG&P Pratham. The former also operates over 80 CNG stations.
“I Squared will merge Think Gas and AG&P city gas businesses and the investor will pick up stake in the merged entity through a mix of primary and secondary investment,” one of the sources said.
The combined platform could fetch a valuation of upwards of $1 billion, the person said. “Talks are on with investors such as Mubadala and a couple of Japanese investors,” he added. Investment bank Barclays is advising I Squared for the stake sale, sources said.
Mails sent to I Squared Capital, Mubadala and Sumitomo did not elicit any responses till press time on Thursday.
Established by I Squared in 2018, Think Gas operates across 13 districts in India and supplies natural gas to domestic, commercial, industrial and automotive sectors. Headquartered in Delhi NCR, Think Gas serves over 30,000 customers daily, according to company website.
AG&P has 12 long-term 25-year exclusive concessions in Rajasthan, Andhra Pradesh, Karnataka, Kerala and Tamil Nadu, while Think Gas has seven licences to operate across 13 districts across Punjab, Madhya Pradesh, Bihar, Uttar Pradesh and Himachal Pradesh.
I Squared’s city gas distribution business is the largest institution-owned platform in the country. Other major city gas distribution businesses include Adani Total Gas and Torrent Gas on the private side and PSU-backed players such as Mahanagar Gas and Indraprastha Gas.
Last month, Mubadala picked up a significant stake in I Squared Capital-backed roads infrastructure investment trust (InvIT) Cube Highways for around $300 million.
Mubadala’s other investments in India include Tata Power Renewables, Jio Platforms, and Reliance Retail.
India’s natural gas demand is growing at a CAGR of 8% and the government is trying to increase access to gas to about 70% of the population by 2025.
