Reliance Power Fund buys 23% in EMI Transmission
RELIANCE India Power Fund, a 50:50 JV between Anil Dhirubhai Ambani Group and Singapore-based Temasek Holdings, has picked up 23% in Mumbai-based EMI Transmission, an unlisted power equipment company, for Rs 50 crore.
The company, a supplier to power transmission line companies, intends to use the proceeds to fund its growth plans, including expanding its existing capacity, setting up a new plant in Sharjah and a rubber plant in Nashik. KPMG Corporate Finance was the advisor to this transaction.
This deal has resulted in EMI deferring its proposed IPO, which was supposed to hit the market this year, a top company official said. ”We have put on hold our IPO plans for this fiscal, as this deal (with Reliance India Power Fund) will enable us to fulfil our fund requirements for the moment,” EMI’s managing director Sanjeev Seth told ET. He did not rule out an offering sometime in the next financial year.
EMI, which reported sales of Rs 125 crore and net profit of Rs 8 crore in ’05-06 plans to raise Rs 90-120 crore via the IPO. Earlier this year, the $200m Reliance India Power Fund, which was set up in ’04 to finance domestic power projects, had bought 20% in New-Delhi-based power equipment player Su-Kam for Rs 45 crore.
Investment banks anticipate energy and power sector to constitute a significant chunk of the domestic private equity deals over the next couple of years, given the government’s major investment plans in the sector. The size of these deals may be large, as the sector is capital-intensive and Indian power companies are cash-strapped, they said.
Several top private equity players such as Warburg Pincus, SAIF Partners, Actis, IDFC Private Equity are believed to be in talks to pick up a stake in leading domestic power companies.
Meanwhile, some public sector power companies National Hydroelectric Power Corporation (NHPC), Power GridCorporation of India (PGCIL), Rural Electrification Corporation (REC) and North Eastern Electric Power Corporation (NEEPCO) are also planning IPOs in ’06-07.