Premji Invest shows keen interest to fund oil pipeline company - IOT Infrastructure

Premji Invest, the $1.5 billion private & public equity fund owned by Wipro Limited's billionaire chairman Azim Premji, is understood to have shown interest to pick up stake in IOT Infrastructure & Energy Services Limited. Formerly Indian Oiltanking Limited, IOT Infrastructure is an equal joint venture between Indian Oil Corporation and Oiltanking Gmbh of Germany. The company is in the market to raise Rs 400 crore and according to private equity industry players, UTI Infrastructure has been almost firmed as the lead investor. 

Premji Invest is understood to have shown interest to co-invest around Rs 150 crore in this deal. Premji Invest will be in race for this deal along with other PE investors such as Olympus Capital, TA Associates, IDFC Private Equity among others. 

The capital raised by IOT will be mainly deployed to part-finance the 1,410,435-kilolitre petroleum product facility at IOC’s 15-million-metric-tonnes per annum Paradip refinery and build the 220,000-kilolitre common user terminal in Raipur, Chhattisgarh. According to PE players who have seen the proposal to raise equity detail that the valuation of IOT is in the range of Rs 2,600 crore and the fresh investors would hold around 12-13 per cent fresh equity in the expanded pool. The existing partners will hold close to 44 per cent each. 

If Premji Invest manages to clinch this deal, this will be a major infrastructure deal in its bouquet of private equity investments. Premji Invest has invested in various companies including Carnation, a pan-India multi-model car servicing network started by Maruti Industries ex-MD Jagadish Khattar, Manipal Education, cancer care chain Healthcare Global besides the failed retail venture Subhiksha Retail. 

While Azim Premji’s fund portfolio of private equity is in small numbers, the portfolio of public equity far outnumbers the PE deals. According to PE industry players, while the PE investments from Premji’s fund are around $300 million, public equity is in excess of $500 million. “It is an evergreen fund and there are no other partners. Most of the dividends which Premji gets from his 79 per cent holding in Wipro Limited is routed to this fund which is being managed by a team of around dozen investment professionals,” a PE industry player noted.