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Corporate - Mergers & Acquisitions


IDFC picks 20.6 pc stake in GSPL

Vinod Mathew

Mumbai , Nov 4

In what may well be the first private sector equity investment in the country's gas transportation business, Infrastructure Development Finance Company Ltd (IDFC) has acquired 20.6 per cent equity in Gujarat State Petronet Ltd (GSPL).

The Mumbai-based company has acquired the stake at a 25 per cent premium, for a consideration of Rs 90 crore.

Mr Darius Pandole, Executive Director, IDFC, who signed the shareholder's and subscription agreement with Mr D.J. Pandian, Director, GSPL, told Business Line that the investment was being made on the strength of the company having laid a 487-km long gas grid till date at an investment of around Rs 1,000 crore.

"We will evaluate on merit the requirement to invest further in GSPL's proposed expansion. To that extent, there would be no compulsion on us," Mr Pandole said.

GSPL is planning to add another 400 km to its grid over the next two years at an investment of Rs 800 crore. It has also been stated that the company was mulling private placement and even a public issue to fund its expansion plans.

The deal, which has been in the making for the past few months, is expected to trigger other similar investments in the GSPL, where LIC is said to be a frontrunner. The company, having held back so long for attracting a premium for its equity, may now look at other potential investors. The end game could well be to divest as much as 60 per cent and keep the stake of GSPL at 40 per cent

GSPL had been deferring the dilution of its equity for the past few years despite many potential strategic investors eliciting interest in picking up stake. At one stage, the company had short-listed British Gas, Royal Dutch Shell, GAIL, Kribhco, IOC and BPCL for a strategic equity sale. The other two which were in the fray included Gaz de France and Niko Resources.

Subsequently, the company, originally floated to meet the gas transportation requirements of Gujarat State Petroleum Corporation (GSPC), decided to co-opt an investor who had no strategic interest in it. Also, none of these companies were willing to offer a premium to GSPL.

The present equity sale also falls in line with GSPL's plan to raise Rs 250 crore from the sale of 60 per cent stake. The Rs 350-crore authorised share capital of the company, which hitherto had an issued portion of Rs 245 crore, is expected to stand fully subscribed following this deal.

Following the divestment, the equity stake of the State-owned enterprises would stand reduced to 80 per cent, with that of the main promoter GSPC getting diluted to 60 per cent at around Rs 200 crore.

The combined equity holding of the other five PSUs would go up from the existing 15 per cent to 20 per cent with all of them raising their respective exposure. The cash rich Gujarat Maritime Board alone would hold 10 per cent in the revised equity.

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