Ushdev Power Holdings, arm of metal trading house Ushdev Industries, is looking to buy out a bankrupt wind power company listed on London's Alternative Investment Market (AIM).
Arvind Prasad, managing director of Ushdev Power Holdings, refused to divulge the name of the company they were planning to acquire. He said buying an already listed entity could provide an avenue to raise funds for their own company, in addition of adding 42 Mw of operating wind capacity to its portfolio.
"The wind company was listed on AIM around £1.20 but is now trading at 28 cents. The cost structure of the company is not viable but the projects have a good cash flow," said Prasad. The total value of the company to be acquired could be $20 million.
Ushdev Power Holdings entered into wind power in the early 1990s to gain tax advantages by the accelerated depreciation procedure. After the investment scenario changed in the sector with the Electricity Act of 2003, it re-started investing seriously in the wind power sector, after 2005. It currently has 30 Mw of capacity here and has already signed agreements to set up 60 Mw in Rajkot, Gujarat.
"We have plans to put up 300 Mw of power in the next three years and we need a total investment of Rs 1,800 crore. The equity portion of the investment will be Rs 540 crore," Prasad said.
A part of the equity required can be raised via AIM if the bid for the company goes through. If not, Ushdev is alternatively looking for a partner to pick up equity in the power holding company. It has already told ICICI Securities to look for an investor, preferably a private equity firm. The extent of dilution could be as much as 50 per cent, the company said.