ICICI Venture mulling $500-mn platform for power assets

Private equity (PE) firm ICICI Venture, which is raising a $300-million (Rs 1,920 crore) infrastructure fund, is also planning to raise $500 million (Rs 3,200 crore) for a platform to invest in power projects that are either completed or 18-25 months away from completion, said a senior executive.

''We are thinking of a separate pool of capital for the power sector. There's a robust pipeline of assets, and we would look at picking up a majority stake in these," said Vishakha Mulye, managing director and chief executive officer, ICICI Venture. The PE firm has held closed-door discussion with investors for this platform, which is different from a fund concept.

The private sector added 36,257 Mw in the 12th Plan (2012-17) till March 2015, after adding 21,719 Mw in the 11th Plan. ''The deal supply is coming out of that," said a PE executive.

There has been a flurry of deals in these assets. In November 2014, JSW Energy bought two hydro-power plants from Jaiprakash Power Ventures of 1,391 Mw for Rs 9,700 crore. In November, Avantha Power and Infrastructure Ltd sold its 600M Mw Korba power plant to Adani Power Ltd for an enterprise value of Rs 4,200 crore.

In August 2014, Adani Power had bought Lanco Infratech's 1,200-Mw Udupi power plant for over Rs 6,000 crore of which Rs 2,000 crore was in cash and Rs 4,000 crore in long-term debt. ''There are a lot of assets, which are available at attractive prices," said Mulye.

What's common in these assets or the recent deals is that the assets are either operating or nearing completion, the fuel supply, power offtake and approvals are in place, the sponsors are over-leveraged and under pressure from lenders.

Meanwhile, it's been hardsell for ICICI Venture's $300 million infrastructure fund. Launched in 2011-12, it has received investor commitments of $250 million and announced the first close in early 2014. The firm plans to have a final close between July and September 2015. Internationally, the time gap between the first close and final close of fund can be as much 19 months; the firm would hope it doesn't exceed this.

Platform company

This could be the first time someone will open a platform company in India. Large global limited partners, who invest hundreds of millions in an asset, find it better to control it through a platform company. Few such examples are the Thames Water Company, where three Canadian pension funds were the sponsors and Japan Solar, which consolidates solar power projects in Japan, had four investors. A platform company is a holding company for unlisted assets, which the sponsors can list to monetise.