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Mahindra Group to enter solar power generation

Wednesday, 17 November 2010 - 2:42am IST | Place: Mumbai | Agency: DNA
Is looking to rope in a partner, which would bring in domain expertise as well as funding; may take private equity firm on board.

Anand Mahindra-led Mahindra Group, which entered aerospace last year, has zeroed in on yet another business opportunity.
The group has firmed up plans for getting into solar energy generation business and is looking to rope in a partner, which would bring in domain expertise as well as funding for the venture.

An industry source told DNA, “The Mahindra Group is venturing into solar power generation business and is likely to make this foray public in the coming months.” The source said that company is planning to rope in an investment partner and is currently in discussions with a few firms for it.

A Mahindra & Mahindra spokesperson said, “As a company policy we do not comment on market speculations.”

A senior official with a leading global private equity (PE) firm said, “Considering they have taken the PE-backed route earlier it is likely that the new business foray will follow a similar pattern. Given the comfort level they have with Kotak PE, they might go with the same partner.”

Once concluded, the solar power generation venture will be Mahindra’s third such private equity-backed business foray in the last couple of years. Last year, the group had partnered with Kotak PE to acquire majority stakes in Australia-based aerospace companies Aerostaff Australia and Gippsland Aeronautics for around Rs175 crore.

The group’s first PE backed deal was the acquisition of the Italian gear manufacturer Metalcastello SpA in 2008. It had paired with ICICI Ventures Funds then.

Of late large industrial houses have become increasingly comfortable in taking the PE route for funding ventures.

For instance, the Tata Group has partnered with Temasek for Tata Sky and Tata Teleservices, the GMR Group got IDFC Private Equity to invest in GMR Energy, Essar Group’s association with IDFC Projects for its power business and 3i’s investment in GVK Power.

Vikram Uttamsingh, executive director and head of PE group at KPMG India, feels the trend of industrial houses partnering with PE firms will only get bigger in the near future.

“This is evident from the number of such deals we have seen of late. Another interesting trend is that PE firms are also willing to take larger bets and higher risks on power sector. This has led to investments being made in greenfield type of projects this year which was not the case in 2007-08,” he said.

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