Tata Opportunities Fund (TOF), the flagship private equity fund run by Tata Capital, today announced an investment of Rs 335 crore ($ 55 million) in Tata Projects Ltd (TPL), an engineering, procurement and construction (EPC) services company of the Tata group.
Headquartered in Hyderabad, Tata Projects had earned Rs 3,444 crore ($ 550 million) revenue in FY14-15 and had an order book of over Rs 16,000 crore ($ 2.6 billion).
TOF has purchased secondary stake from four Tata companies namely Tata Steel, Tata Motors, The Indian Hotels Company and Tata International, which had bought stakes in Tata Projects after the company was formed in 1979. Its investment for a significant minority ownership marks the fund’s first transaction in the infrastructure services sector.
The fund seeks to play a supportive role in assisting Tata Projects in expanding its EPC services franchise with the existing and new customers across segments and geographies. The fund has been invited to appoint a nominee to the board of the company.
Tata Projects enjoys leadership position in power generation and power transmission segments. It has recently diversified into urban infrastructure and heavy civil construction having secured several key contracts in railways and urban transportation, including dedicated freight corridors and metro rail projects (Navi Mumbai and Delhi DMRC).
Tata Projects is a part of the Tata group’s infrastructure cluster, formed to maximise synergies among Tata entities in the sector.
Tata Opportunities Fund’s other portfolio commitments include Ginger Hotels (market leader in economy hotels), Tata Sky (India’s premier DTH satellite TV provider, also a JV with 21st Century Fox), Varroc Engineering (market leader in auto-lighting and 2-wheel auto parts), Shriram Properties (mid-market housing developer) and TVS Logistics Services Ltd (India’s leading 3rd party logistics service provider).
Prasad Menon, Chairman of Tata Projects, said, “Indian infrastructure focused companies will see significant growth with the impact of the Government of India’s ‘Make in India’ initiative. Tata Projects' strategic evolution in the last few years has made it a well diversified player with marquee credentials and provides it with the opportunity to become a world-class franchise. We are glad to welcome TOF as a strategic partner in continuing this journey.”
Vinayak Deshpande, CEO and Managing Director of Tata Projects, said, “We have maintained a strong balance sheet and this partnership bolsters our ability to raise additional financial resources, when required. We look forward to working with TOF in further strengthening Tata Projects and creating value for all stakeholders.”
Padmanabh Sinha, Managing Partner of the fund’s advisory team in India, said, “The fund has been evaluating the Indian EPC space and is looking at a revival in the sector as it comes off a cyclical low. The fund believes that EPC companies will be early beneficiaries of an increase in capital spending in India. The fund looks forward to working with Tata Sons and other Tata group shareholders of Tata Projects to create a technology-enabled global scale EPC services company.”
Tata Opportunities Fund (TOF) is a third party private equity fund with a mandate to invest into exclusive situations with market leading businesses which benefit from TOF’s relationship with the Tata group. TOF had completed the final closure of its fund in early 2013 with commitments of $600 million from marquee global investors.