Hong Kong-based Olympus Capital Holdings Asia will invest $300 million in two wholly-owned subsidiaries of Tata Power, India’s largest private power producer and part of the Tata Group, one of India’s leading business conglomerates.
The investment will be made in special purpose vehicles Bhira Investment and Bhivpuri Investment in the form of shares with differential rights and will give Olympus Capital a stake of about 14 percent to 15 percent, the firm said in a statement. The two Tata Power-owned coal special purpose vehicles hold 30 percent stakes in Kaltim Prima Coal (KPC) and Arutmin, two of Indonesia’s largest export coal mines.
The completion of the transaction is subject to regulatory and lender approvals.
Olympus Capital will make the investment from Olympus Capital Asia III, which closed on $750 million in June 2009 and is focused on mid-market private equity and special situations in the region.
“Given our regional presence in key markets in Asia and our expertise in the power and energy sectors, we look forward to working with Tata Power to source high-quality coal investments and to explore opportunities to collaborate in other segments of their business,” Daniel Mintz, founding managing director of Olympus Capital, said in a statement.
“Olympus Capital was very familiar with the world-class Indonesian coal assets that Tata Power holds in its Coal SPVs, as they were part of an investment we made more than ten years ago,” he added.
The investment will be used for expansion of business and may be used to support additional resource acquisitions and investments, the statement noted.
Tata Power is India’s largest integrated private power production utility. The company has an installed generation capacity of about 3,000 MW and has a presence in thermal, hydro, solar and wind power generation, transmission and distribution. According to the company’s projection, its thermal power stations are expected to require between 23 and 25 million tonnes of coal per annum by 2015, up from three million tonnes in 2009.
Olympus Capital also manages Asia Environmental Partners, a cleantech-focused fund that closed on $250 million in June 2009. In April earlier this year, Olympus won from OPIC the mandate to manage Asia Development Partners III, a fund focused on investments in infrastructure and infrastructure-related companies primarily in India and potentially in other OPIC-eligible Asian countries. That fund has been seeded with a $150 million commitment from OPIC and is targeting overall commitments of $300 million.
Macquarie Capital Advisors is the M&A advisor to Olympus and Barclays Capital is the financial and debt structuring advisor. ICICI Bank and Barclays are the mandated lead arrangers on the financing.