3i IIF invests INR 900 cr for stake in Adani Power

Adani Power is at present developing an independent 2,640 MW imported coal-based thermal power plant in Gujarat. The project, launched in June 2006, is expected to become operational by 2009 and achieve full capacity by the close of 2010.  Power generation in India is expanding on the back of government spending to sustain economic growth, policy reform, a focus on rural electrification and increasing power consumption.

Anil Ahuja, managing director and co-head of 3i Asia, said on the transaction: "India is witnessing phenomenal growth in the power sector, specifically power generation. Through this transaction, we have invested in a landmark power generation asset as well as reaffirmed our confidence in the Adani Group, whose Mundra Port was backed by us in 2005. Adani Group is an extremely competent partner which has demonstrated its ability to conceptualise and execute large-scale infrastructure projects."

Gautam Adani, Chairman of Adani Group, added: "Adani has a strong commitment to power generation. We are planning to generate close to 7,500 MW of power in India by 2015. Towards this, we have already firmed up 2,640 MW project at Mundra and have commenced work for another 2,000 MW phased project at Tiroda in Maharashtra. We see 3i as a committed partner who adds value to our business. I am impressed by 3i's in-depth understanding of the infrastructure sector, clarity of decision making and speed of execution."

3i Group Plc Chairman, Baroness Hogg, who is in India this week, spent Wednesday at Mundra Port where the 2,640 MW Mundra Power Project is being implemented. She recognised the rapid integrated development of the Port and Mundra's future status as a Special Economic Zone (SEZ). The power project at Mundra, in her view, would benefit enormously from the infrastructure support of the Port and SEZ.

3i entered into a partnership agreement with India Infrastructure Finance Company Ltd ("IIFCL") last April. Together with other lenders, IIFCL is also participating in debt funding of the project.  S S Kohli, Chairman and director of IIFCL, commented: "In light of the substantial requirement for funding in the sector, the collaborative arrangement between IIFCL and 3i provides a strong push for funding infrastructure projects. This investment is a prime example of how our partnership with 3i works."

Michael Queen, managing director of 3i's infrastructure business, commented on the Fund: "3i India Infrastructure is uniquely positioned to access a fast-growing market. This first investment by the Fund reflects the richness of the opportunity we see in India and demonstrates our ability to back the right partners and assets in this space."

As announced last month, the Fund, which is targeting US$1bn in commitments, will create a balanced portfolio of investments spanning the asset lifecycle and is advised by an investment team combining long-standing international expertise and a strong local presence. The fund held its first close this month on US$500m in commitments from cornerstone investors 3i Group and 3i Infrastructure Limited.

Sourced From: R&PM:Edelman