Asian Genco raises $425 million from investor consortium

Singapore-based Asian Genco, which develops power projects in India, has raised $425 million from a consortium of investors led by Morgan Stanley's infrastructure fund.

Asian Genco, a Singapore-based infrastructure company with investments in Indian power generation assets and engineering services businesses, has raised $425 million from a consortium of investors led by Morgan Stanley Infrastructure Partners (MSIP). Also included in the consortium are General Atlantic, Goldman Sachs, Norwest Venture Partners, Everstone Capital and others.

The investors have not disclosed any details of the valuation at which they have invested so information on what percentage of the equity the $425 million represents is not available. Each investor has come in as an equal, said a source close to the transaction, with pari passu board representation and other rights.

Asian Genco is developing a portfolio of hydro, thermal and non-conventional generation assets with a total capacity of nearly 4,000 megawatts at a cost of around $4.5 billion. These assets include Teesta III, a 1,200MW hydro power project, which is currently at an advanced stage of construction, and a 1,320MW coal-fired, thermal power project in Andhra Pradesh. By 2012, Asian Genco aims to be one of the largest non-family-owned, private power companies in India with more than 1,350MW of operational power assets and a development pipeline of over 10,000MW of capacity.

The money it will get from this current round of fundraising leaves Asian Genco in the unique position of being fully funded for its current pipeline of projects and able to pursue the development of new projects. This was a key advantage of bringing in a consortium of investors, added the source. The consortium partners have invested together in the past and have a high degree of comfort working with each other. Further, they all recognised that Asian Genco would be well-placed to focus on successfully building its business once it was fully funded.

PTC India, a public-private partnership initiated by the Indian government, and PTC Financial Services, a non-banking financial services company set up by PTC, are investors in some of Asian Genco's projects. The company has earlier also raised $60 million from Tiger Global Management to help it achieve the financial close on a hydro power project. That investment was structured by Zeus Capital. Zeus Inframanagement, a Singapore-based advisory firm with a focus on the infrastructure sector in India, advised Asian Genco on the current fundraising.

The roster of investors participating in the consortium reads like a who's who of infrastructure and private equity firms:

Morgan Stanley Infrastructure Partners Fund closed in May 2008 with $4 billion of equity commitments -- well above the initial fundraising target of $2.5 billion. And in August of that same year, MSIP opened an office in Mumbai and transferred Gautam Bhandari from New York to head it. This is not MSIP's first investment in India, but details of other investments have not been made public. The transaction represents MSIP's ninth investment globally and the fund is now 60% invested. 

General Atlantic was established in 1980 and manages approximately $15 billion of capital. It is well known in India for its investment in Genpact, the outsourcing arm of General Electric. Genpact is widely considered the harbinger of the outsourcing to India revolution. Norwest is a venture and growth equity investment firm that manages more than $3.7 billion of capital. Everstone Capital is an alternative asset manager with $1 billion of assets under management and exposure to India through dedicated India-focused private equity and real estate funds.

"We are delighted to have led this landmark transaction in a critical sector for India and one in which we see immense growth opportunity," said Bhandari in an interview with FinanceAsia. "The transaction is unique in many respects. For the first time in India, a consortium of partners has come together to fully fund a slate of differentiated generation assets being built by a world-class execution team." 

An exit for these investors could be either through an initial public offering at an appropriate time, or through a trade sale, the source said.

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