Indian private equity firm Avigo Capital Partners has invested $30 million for a significant stake in AMR Constructions (AMR), a Hyderabad-based mining and infrastructure services company with presence in industrial & housing construction, and irrigation. Incorporated in 1992, AMR is promoted by A Mahesh Reddy, a first generation entrepreneur.
This is not the first time that the PE firm is investing into an infrastructure company or an EPC player. Earlier this year, Avigo invested $14 million in Delhi-based Naftogaz India Pvt Ltd, an EPC player in the oil and gas sector. Also the $30 million deal size means Avigo, which recently closed a $240-million fund, has also scaled up its investment sweet spot.
This is also not the first instance of institutional capital flowing into AMR. According to the company's DRHP, it issued unsecured interest-free Fully Convertible Debentures (FCD) to Grant Investment Limited, which infused Rs 152.26 crore into the company in FY'07-08. It filed for an IPO in 2008 but has not been listed yet.
AMR's clients including Singareni Collieries Company Limited, India Cements, Madras Cements, Grasim Cements, Gujarat Industries Power Company Limited and Other Mineral Enterprises. The company's USP lies in the fact that it is one of the few mining services firms focussing on mine developer-cum-operator opportunity, which has a huge potential.
“Strong demand for mined resources backed by robust growth in the Indian economy should result in the Indian mining industry doubling from the current size of $15 billion to $30 billion over the next three years. AMR, with its strong technical expertise and execution capabilities, is poised to capitalize on this opportunity”, S. Harikrishnan, Investment Director, Avigo Capital Partners, who led the transaction, told VCCircle.
3NS Capital was the exclusive advisor to Avigo for this transaction.
AMR would be the fourth investment from Avigo’s third fund which it closed in May 2010. Early this year, the Delhi-based private equity fund focused on mid-market companies closed its third fund, Avigo SME Fund III, at $240 million.
The PE firm has over $365 million under management through more than 25 investments in over 15 companies. It has also achieved full or partial exits from six of its portfolio companies. Its first SME Fund I of $10 million invested in Privi Organics Ltd and Rinac India Ltd. Its second fund invested in Comat Technologies, Spykar and Tecpro Systems Ltd.
Action In "Infrastructure Enablers"
As PE funds cannot make investments in the core infratsructure owing to their "growth equity" nature, a lot of action is seen in the ancillaries space or infra enablers, as they are called. Recently, Clearwater Capital hiked its stake in Diamond Cables by purchasing 2.2% stake for around Rs 10 crore through the secondary market which takes its total holding to 13.77%. Originally an electrical products maker, the company has diversified into a manufacturer of power transmission equipment and turnkey services provider (EPC).
NYLIM Jacob Ballas India Fund III, LLC, a Mauritius-based private equity vehicle dedicated to India, infused Rs 152 crore into SEW Infrastructure Ltd, an engineering, procurement and construction (EPC) company in Hyderabad. Axis Private Equity already has investments of Rs 126 crore in Delhi-based railway line manufacturer Harish Chandra India Ltd (HCIL) and Rs 60 crore in Vishwa Infrastructures and Services, which executes projects in the water supply and sanitation sector.
Clearly, deals are coming back particularly where infrastructure is the central theme. Nitin Bhasin, Head, Infrastructure, Noble Execution Group, said, while the government has announced plans for infrastructure investment of $1 trillion over FY12-17 (2X the amount for FY07-12), it needs to fill critical gaps in planning, policies and procedures before such magical numbers can be hit. About 50% of this $1 trillion will be met by private sector schemes.