Megha Engineering MD eyes Rs 1,500 crore debt deal to buy out uncle's stake: Report

The deal must be concluded by August to help meet a sizeable debt servicing obligation. MEIL reportedly has a Rs 15,000 crore annual repayment schedule, of which Rs 4,000 crore has already been cleared.

PV Krishna Reddy, Managing Director of Megha Engineering & Infrastructures Ltd (MEIL), is currently in advanced discussions with global private credit players—including Elham Credit Partners, Davidson Kempner, and Oaktree Capital—to raise approximately Rs 1,500 crore, The Economic Times reported. The funds are intended to help Reddy acquire his uncle's stake in the company, thereby consolidating his control.

According to ET, the capital will be raised via structured credit and backed by Reddy’s personal shareholding. Reddy currently holds 51% in MEIL, a privately held infrastructure major with a turnover of Rs 42,442 crore in FY24. The remainder of the equity is owned by his uncle PP Reddy and other family members.

Sources told ET that Reddy had initially considered both bank financing and private credit routes but leaned towards private lenders due to more competitive pricing. The debt raise is expected to be structured with an internal rate of return (IRR) between 16.5% and 17%, and closure is likely by next month, provided terms are finalised.

That said, no binding agreement has yet been reached, and negotiations are still underway, with due diligence ongoing. One person familiar with the matter said that although talks began earlier this year, they have gained traction in recent weeks. The deal must be concluded by August to help meet a sizeable debt servicing obligation. MEIL reportedly has a Rs 15,000 crore annual repayment schedule, of which Rs 4,000 crore has already been cleared.

Representatives from Davidson Kempner and Oaktree Capital declined to comment, while Elham Credit did not respond to queries. Krishna Reddy was also unavailable for comment, according to ET.

MEIL is widely recognised for its dominance in water infrastructure, particularly irrigation and drinking water projects, which together still form 52% of its order book. The company has also diversified its portfolio, with roads, power, and hydrocarbons now accounting for 18%, 13%, and 11% of its pending projects, respectively, as per a January report by Acuite Ratings.

In the political domain, MEIL was notably the second-largest contributor in India’s 2024 electoral bond purchases. Financially, it posted a 34% rise in revenue in FY24, growing from Rs 31,186 crore in FY23 to Rs 42,442 crore.