Grapevine: PAG eyes Edelweiss units; GVK works to ward off hostile takeover of MIAL

By Ankit Agarwal

  • 26 Aug 2020
Credit: VCCircle

Pacific Alliance Group (PAG), the world’s largest Asia-focused alternative asset management company, is looking to acquire a majority stake in the wealth, investment banking, and capital markets businesses of Edelweiss Financial Services. 

This was reported by The Economic Times, which cited multiple people aware of the matter. 

PAG has pipped Blackstone and Bain for the stake acquisition.

As part of its maiden private equity bet in India, PAG will acquire a 51% stake for up to Rs 2,500 crore ($336 million) in a new entity being spun off, said the people, adding that the entity will eventually get listed.

The capital markets business includes institutional equities, investment banking advisory, issuer services, forex trading, prime brokerage and financial products distribution.

Meanwhile, GVK Airport Holdings Ltd, the majority owner of Mumbai International Airport Ltd (MIAL), has approached lenders to urgently raise cash to ward off a hostile takeover of the crowned asset, two people aware of the development told Mint.

“GVK Airport Holdings pledged 63% of its ownership in MIAL with three lenders for Rs 2,150 crore ($289 million),” one of the persons said. These debts are due to be repaid in coming months, failing which the lenders are likely to invoke the pledge and can sell the stake to a third party to recover the dues.

Adani group is already in talks with GVK to acquire a controlling stake in MIAL.

“In all likelihood, Adani group is talking to the lenders to acquire the pledged shares and thereby wrest control,” a senior GVK official said.

MIAL is a joint venture of the GVK group (50.5% held through GVK Airport Holdings Ltd), Airports Authority of India (26%), Bid Services Division (Mauritius) Ltd (13.5%), and ACSA Global Ltd (10%).

“Whether the banks invoke the pledge and start a sale process or whether GVK tries to raise money on its own, this is now akin to a distress sale,” another person said.

In another development, private equity fund Actis is in talks with ReNew Power to acquire 550 megawatt (MW) projects for an enterprise value of up to Rs 3,000 crore ($403 million), two people aware of the development told Mint.

These comprise a 300 MW solar project at Pavagada Solar Park in Tumkur district of Karnataka and a 250 MW wind farm in Gujarat.

Actis Long Life Infrastructure Fund (ALLIF) recently acquired two solar projects totalling 400 MW from Acme Solar Holdings Ltd based out of Andhra Pradesh and Madhya Pradesh.

The proposed deal also comes against the backdrop of debt financing for green energy projects drying up with large domestic banks hesitant to finance projects that have committed to sell power at less than Rs 3 per unit as they suspect the viability of such projects.

Also, the Reserve Bank of India (RBI) has rejected the resolution plan, approved by the insolvency tribunal, of selling Aircel’s assets to UV Asset Reconstruction Company Ltd (UVARCL), people aware of the development told The Economic Times.

The plan was dismissed on the grounds that it does not conform with guidelines laid down for asset reconstruction companies (ARCs) and provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (Sarfaesi). 

The carrier will now be staring at a possible liquidation.

The Sarfaesi Act does not allow ARCs to submit resolution plans for ailing companies, but the Insolvency and Bankruptcy Code (IBC) allows them to do so.

Legal experts say the development may have an impact on a similar resolution plan for Reliance Communications (RCom) and its unit Reliance Telecom, with UVARCL again being the nominated buyer of the bankrupt telco’s key assets, including spectrum.

UVARCL had outbid Reliance Jio, Bharti Airtel and private equity firm Varde Partners to pick up assets of Aircel.