The Hindu Business Line : Citigroup picks up 30% stake in Ind Barath Infra

Chennai June 26 Private equity funds managed by Citigroup have picked up a 30 per cent stake for Rs 250 crore in Ind Barath Infra Pvt Ltd, which has power plants with a total capacity of 160 MW.

The funds will be used to set up new projects in different locations, work on one of which is underway, according to Mr K. Raghu, Chairman and Managing Director, Ind Barath Infra.

The private equity funds have been raised from Citigroup Venture Capital International Growth Funds, which invests in emerging markets. Motilal Oswal Investment Advisers Pvt Ltd advised Ind Barath Infra on the deal.

Captive power plants

Ind Barath Infra owns two biomass power plants (20 MW and 25 MW capacity) in Tamil Nadu, a 6.5 MW biomass plant in Andhra Pradesh, a 100-MW gas-based plant in Tamil Nadu and a 5-MW hydro-power plant in Himachal Pradesh. The gas-based project in Tamil Nadu is a group captive power plant, which means it sells almost all of the electricity generated to companies that hold an equity stake in the project.

All these projects have been executed by companies specially established for the purpose and Ind Barath Infra holds a majority stake in each one of them, according to Mr Raghu.

Ind Barath is setting up a 126-MW imported coal-based group captive power plant in Tuticorin, Tamil Nadu, for which it has again tied up with a number of companies. It plans to set up a 270 MW imported coal-based group captive power plant in Karwar, Karnataka, for which environmental clearance is awaited.

According to Mr Raghu, the company is awaiting coal linkage for a 250-MW pithead power plant in Ib Valley, Orissa. This will come up as an independent power producer rather than a group captive project. Ind Barath Infra plans to shortly commission a 20-MW biomass power project in Nanded district of Maharashtra and also increase the capacity of the hydro-power project in Himachal Pradesh to 15 MW.

`Free of risks'

Mr Raghu said since the company goes in for group captive power projects, issues of signing power purchase agreements with the electricity boards do not arise.

In fact, according to officials who were part of the deal, this is one of the reasons for Citigroup to invest in Ind Barath. The company's projects are free of risks associated with the electricity board, while a significant portion of its assets are in renewable energy, which made it attractive for Citigroup, the officials said.

Besides, the company has an attractive list of customers that includes companies like the TVS group, Amalgamations group and MRF. Ind Barath Infra has also tied up with some leading property developers for its coal-based plant that is coming up in Tuticorin.

Asked about the exit options for Citigroup, Mr Raghu said this had not been finalised yet. The company could go public two years hence or even look for a listing on the Alternative Investment Market of the London Stock Exchange.

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