Deepak Cables (Papa Rao Karuturi Chairman), the Bangalore-based Rs 750 crore EPC (engineering, procurement, construction) player in the power sector, is set to raise Rs 200 crore through the private equity route.
UTI Ventures is leading the round with an investment of close to Rs 80 crore in this 25-year old firm, which makes cables for transmission & distribution of power.
The other investors are expected to be finalised in a month's time. UTI Ventures MD Raja Kumar confirmed this investment, but however declined to give out further details. O3 Capital, a boutique investment firm, is advising Deepak Cables on this transaction.
The power ancillaries' sector has been attracting a lot of private equity interest over the past 18 months given the increasing thrust which is being put from the Indian government to ramp up the power generation capacity.
Independent research data indicate that during the past 6 quarters close to $2.14 billion of PE money has been invested in the Indian power sector.
"Going forward, an on average of the annual $20 billion PE investments anticipated into Indian companies, 20 per cent is expected to be routed in to the power sector and this is expected to be sustained over the next three years," a PE analyst detailed.
The advantage Deepak Cables brings to the table is that the company has a cable manufacturing unit which rides in with EPC contract thus enabling the company to control cost.
According to industry information, the company is turning in a net of close to Rs 80 crore and is expected to scale up significantly as it aims at a topline of Rs 1400 crore during FY09.
According to information available, Deepak Cables generates 70 per cent of its sales through EPC contracts while the rest from selling cables to third parties.
"Deepak Cables has been extremely active in the South Indian region having aligned itself closely to power generation and distribution firms. The company is now actively scaling up its operations to tap in to Punjab, Madhya Pradesh, Bihar," a source detailed adding that Middle East is also an region which this company is eyeing.