India Infrastructure Development Fund (IIDF), an in- vestment arm of UTI Asset Management Co. Ltd, is in advanced talks to purchase a minority stake in IOT Infrastructure and Energy Services Ltd, according to two persons with direct knowledge of the matter.
IOT is a joint venture between Indian Oil Corp. Ltd and Germany
“We are in talks to purchase around 7-8% stake in the company”, said one of the two per- sons cited above. He declined to reveal the exact investment amount as the deal is yet to be signed, but said it would be less than `150 crore. IIDF declined to comment.
IOT is in talks with private eq- uity (PE) funds to explore avenues for raising funds as plans for an initial public offering (IPO) have been delayed. MAPE Advisory Group is IOT's investment banker.
“The response to the PE fund- raising was overwhelming.
More than half a dozen PE firms wanted a share of the pie. The interest was mostly prompted by an opportunity to back an enterprise of a large state- owned firm”, said another person directly involved with the deal, requesting anonymity as he is not authorized to speak to the media. According to him, there could be other PE funds looking at buying stakes in the company.
More than half a dozen PE firms wanted a share of the pie. The interest was mostly prompted by an opportunity to back an enterprise of a large state- owned firm”, said another person directly involved with the deal, requesting anonymity as he is not authorized to speak to the media. According to him, there could be other PE funds looking at buying stakes in the company.
The share-sale plan has not been abandoned, said Jatin Mavani, president (finance), IOT.
The company is waiting for better market conditions and is meanwhile looking at various options to raise funds for expansion, he said, without specifying the quantum.
The company is waiting for better market conditions and is meanwhile looking at various options to raise funds for expansion, he said, without specifying the quantum.
“We have not received any money from anybody yet,“ he said by phone from Mumbai.
IOT had filed a draft prospectus with the Securities and Ex- change Board of India in November last year, proposing to raise `800 crore through a pub- lic offer.
IOT had revenue of `1,522 crore for the year ended 31 March 2010, it said in the draft prospectus. Of this, engineering, procurement and construction (EPC) comprised `1,355 crore. The company typically seeks EPC-related contracts from companies setting up terminals of their own.
IOT, which offers an array of services to the oil and gas industry, operates a diverse portfolio of businesses--EPC, terminal- ling and upstream services. It also aims to enter renewable energy.
According to MAPE, Premji Invest, the private investment venture of Wipro Ltd chairman Azim Premji, Olympus Capital Holdings Asia and New Silk Route Advisors had also considered the investment opportunity. When contacted, New Silk Route and Premji Invest said they had examined the investment opportunity, without giving reasons for passing on the deal. In response to an email, Olympus said: “We are not an investor in the company”.
IOT has a strong business, said Vikram Hosangady, head of transaction services at consult- ing firm KPMG India.
“They have expertise in EPC and have liquid storage facilities, which is a very hot space right now”, he said. “It's a story around their captive sales. IOT has good parentage and with the presence of a foreign parent, corporate governance is expected to be good. This makes for a good story for investors”.
Furthermore, experts say PEs have been interested in the EPC and liquid storage spaces. There are hardly any companies of scale in the storage and terminalling services space for the oil and gas industry in the country.
This gives IOT a head start, said Mayank Rastogi, partner, private equity, Ernst and Young.
“Also, some of the other at- tributes such good systems and processes stemming from a robust parent and leading global player as a JV (joint venture) partner would have also provided comfort to the investors,“ he said.
“Also, some of the other at- tributes such good systems and processes stemming from a robust parent and leading global player as a JV (joint venture) partner would have also provided comfort to the investors,“ he said.
Furthermore, in this case, having known that the firm may look at an IPO in the near future, investors can foresee an exit option and provide liquidity to the investors, Rastogi added.
(Source-: mintlive)