Morgan Stanley leads $425m Indian power deal

The Asian Genco deal backed by firms including General Atlantic, Goldman Sachs, and Norwest Venture Partners marks the largest-ever equity investment in the Indian power sector.

A consortium of investors led by Morgan Stanley Infrastructure Partners (MSIP) has invested more than $425 million in Asian Genco, a Singapore-based holding company with investments in power generation assets and engineering services businesses in India.

The transaction marks the largest equity investment ever in the Indian power sector, according to a joint statement from the investor syndicate which included General Atlantic, Goldman Sachs Investment Management, Norwest Venture Partners, Everstone Capital and other investors.

PTC India, which provides long- and short-term power sale solutions as well as equity support to energy projects, and its financial arm PTC India Financial Services, continue to remain investors in various Asian Genco portfolio projects.
 
“This is a landmark transaction impacting the power sector in India and this financing addresses the immense infrastructure needs of the country,” Gautam Bhandari, head of Morgan Stanley Infrastructure in India, said in the statement. 

Asian Genco is currently developing an investment portfolio of hydro, thermal and non-conventional assets for an aggregate capacity of almost 4,000 megawatts under construction and development. These include Teesta III, India’s largest hydro project in the private sector, and a coal-fired thermal project in the southern state of Andhra Pradesh.

The capital injection will be used to grow the company’s power generation assets across India. With this deal, the company has secured full equity financing for all its current pipeline of projects, Vijaykumar TV, chairman of Asian Genco, said in a statement.

The deal reflects huge appetite for investment in Indian infrastructure, including from mainstream private equity funds as well as infrastructure specialists.     

MSIP has $4 billion under management and makes long-term investments in infrastructure assets globally. It set up a presence in Mumbai in August 2008. 

General Atlantic is a global growth capital firm with approximately $15 billion in capital under management. It was one of the first large US firms to set up a base in Mumbai and has been investing in India since 2002. The investment in Asian Genco is General Atlantic’s first in the energy and resources sector in India.

Everstone Capital is an India-focused alternative asset manager. The firm manages assets of about $1 billion across Indivision India Partners and private equity real estate funds, namely Horizon Realty and Indospace Logistics, an industrial warehousing fund being raised in partnership with US industrial real estate investment firm Realterm Global. The firm is currently in the market for Indivision India Partners II, which is targeting commitments of $550 million.

Norwest Venture Partners makes venture and growth investments globally. The firm, which closed Norwest Venture Partners XI on $1.2 billion in November 2009, manages assets of more than $3.7 billion. In India, it has offices in Bengaluru and Mumbai.

PTC India, formerly known as the Power Trading Corporation of India, has tied up with UK-based emerging markets specialist Ashmore Investment Management for the formation of its maiden private equity fund. PTC launched the power-focused fund in May 2009 and seeded it through a share issue, raising INR5 billion (€80 million; $110 million). The fund’s target is not known.