3i to approach CLB over Krishnapatnam port stake

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The battle among private equity investors and Indian promoters keep going on for a while. In a latest development, UK-based investor 3i Group is taking stringent moves against promoters of Krishnapatnam Port Co Ltd (KPCL), the developer and operator of leading port at Krishnapatnam in Andhra Pradesh. According to people in the know, 3i is approaching the company law board (CLB) against the management, alleging that promoters have refused to stick to the agreement signed in 2009 for buying back stake.

Sources said the 3i Group had exercised its option in September 2013 to sell its minority stake, bought for Rs 800 crore in 2009, in Krishnapatnam Port Company to the Hyderabad-based CVR Group, which refused to buy it. The option expired in March 2014. 3i has started proceedings in court. It will also approach the company law board soon, sources said.  At present, 3i holds 10% in KPCL.

LEGAL TUSSLE

• According to sources, 3i is approaching the company law board against the management, alleging that promoters have refused to stick to the agreement signed in 2009 for buying back stake
• Krishnapatnam Port Company is seeking fresh funds for a while, according to sources, but investors are wary because of the dispute

When contacted, the 3i Group declined to comment. The management of Krishnapatnam Port Company also refused to reply to questions.

Krishnapatnam Port Company is seeking fresh funds for a while, according to sources, but investors are wary because of the dispute with the 3i Group. Krishnapatnam port handled 24.37 million tonnes of cargo in 2013-2014, up 15 per cent from the previous year. The port is used for coal imports by local traders for power plants in the region. It plans to have 42 berths with a capacity of 200 million tonnes, a 600-acre container terminal and a liquid bulk terminal. The company’s debt stood at Rs 3,890 crore in 2012-13.

The 3i Group has has investments in Adani Power, GVK Energy, Ind-Bharath Energy Utkal, KMC Constructions, Soma Enterprise and Supreme Infrastructure BOT Holdings. It also owns stakes in UFO Moviez, BVG India and Navayuga Engineering Company.

The 3i Group has £13 billion ($22 billion) assets under management in private equity, infrastructure and debt. It has decided to stop making private equity investment in India and wants to focus on its existing portfolio.

It is in discussions to sell its stake in UFO Moviez. US-based Providence Equity Partners holds 35.7 per cent and 3i Group 26.5 per cent in UFO Moviez, the world's leading digital cinema chain.

Two months ago, The 3i Group sold a part of its seven-year-old investment in Adani Power at a loss. Last year, another private equity investor, General Atlantic, had moved the company law board against Fourcee Infrastructure, over alleged financial irregularity.