Blackstone bets big on power, eyes several deals

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Blackstone bets big on power, eyes several deals

The Blackstone Group has secured 12.5% stake for Rs 275 crore in Monnet Power Company, which is a 100% subsidiary of steel producer Monnet Ispat & Energy.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » RELATED NEWS Have 2,000 MW of projects in the pipeline: Monnet Ispat ALSO READ See latest News about Monnet Ispat See previous management interviews See what other Experts & Brokerages are saying about Monnet Ispat

The Blackstone Group has secured 12.5% stake for Rs 275 crore in Monnet Power Company, which is a 100% subsidiary of steel producer Monnet Ispat & Energy . Post this transaction, Monnet Ispat will hold 87.5% stake in Monnet Power.

The valuation is based on future merchant power prices, said Akhil Gupta, CMD, Blackstone Advisors (India), in an exclusive interview to CNBC-TV18. "Quality of the management and assets makes the deal attractive."

He is bullish on the power and infrastructure space in India. "We see growth in the power sector and are looking at several other deals in this space."

Here is a verbatim transcript of his comments on CNBC-TV18. Also watch the accompanying video.

Q: Blackstone has paid Rs 275 crore for 12.5% in Monnet Power. Just walk us through how have you valued the company and what do you see the entire enterprise value for this particular arm at?

A: Valuation is based on what is our view of the future prices both for the merchant sector as well as for the PPS. We are assuming that our plan will be merchant for couple of years then we will sign for the PPS and the costs are pretty much liquid now. We have a very little uncertainty about the future cost. So we have a target rate of return and we can back-calculate the valuation based on that.

Q: Would you be content with 12.5% holding in this company or would you want to augment your stake any further going forward before the IPO?

A: For a buyer there has to be a seller. We love this project, we will love to invest more but that is all what the company needed. So we are happy to partner with a great project basically and we would love to get more but we have decent enough amount, we cannot complain.