Underlining the attraction of infrastructure for private equity investors, Baring Private Equity Partners (BPEP) India is set to invest Rs 475 crore ($105 million) in Delhi-based Oriental Structural Engineers, a company specialised in constructing runways and highways. According to sources, Baring PE is likely to acquire around 15-20 per cent stake in Oriental.
In December, BPEP India invested $90 million in Cethar Vessels, the second largest manufacturer of boilers for power plants, for a minority stake. BPEP India manages about $1 billion (Rs 4,600 crore) in various portfolio firms.
Established three decades earlier, Oriental Structural Engineers (OSE) executed 2,700 lane-km of national and state highways in India and abroad. OSE’s current projects include the Salem-Ulunderpet section of NH-68 in Tamil Nadu, part of the Yamuna Expressway (Taj Expressway), the access road to Delhi International Airport, the Pune-Solapur section of NH-9, the Hungund-Hospet section of NH-13 and four-laning of the Nagpur-Saoner-Betul stretch of NH-69. Overall costs of current projects are around Rs 2,000 crore.
Rahul Bhasin, managing partner, BPEP India, refused to comment. Officials of OSE could not be spoken to for verification.
Baring India closed its fund-III at $600 million (Rs 2,720 crore) in 2008 and recently invested Rs 157 crore with Matrix Partners in Kerala-based NBFC Muthoot Finance. So far, BPEP India has invested about Rs 200 crore from its fund-III. It has also invested in Sphaera, a start-up engaged in pharmaceutical drugs business and Shilpa Medicare, manufacturer and exporter of Active Pharmaceutical Ingredients. Its other major portfolio companies include Jyothi Laboratories, Pharmarc, Mphasis, JRG Securities and Auro Mira Energy.
As infrastructure development is highly correlated with India’s future growth, more PE/VC firms are keen on investing in infrastructure companies, especially those in the roads sector. Last year, in one among the top deals in infra space, Actis invested about $78 million in TRIL Roads Pvt Ltd. 3i India Infrastructure Fund invested in Soma Highways in January 2010. In December last year, Nandi Infrastructure Corridor Enterprises, which is building the Bangalore Mysore Infrastructure Corridor sold eight per cent stake to a private equity fund to raise Rs 500 crore. Sadbhav Infrastructure Project Ltd, involved in development of highways and road projects, raised Rs 400 crore from Norwest Venture Partners and The Xander Group Inc by diluting 22 per cent stake last year. Another PE major, India Venture Advisors, invested Rs 50 crore in C&C Constructions, a player in roads and highways, last year.