Blackstone set to take 12% in Monnet Power

The Blackstone Group is likely to acquire a 12% stake in Monnet Ispat’s greenfield power plant to be set up in Orissa. The deal is valued at Rs275 crore.

To be set up by Monnet Ispat’s subsidiary, Monnet Power, the 1,050 mw power plant is expected to cost Rs 5,092 crore. It will be funded through a mix of equity capital and debt.

Both Blackstone and Monnet Ispat declined to comment on the subject and an email sent to Monnet Ispat’s office remained unanswered till the time of going to print. Blackstone, in its revert said, “We do not comment on industry rumours.”

However, a senior official from Monnet confirmed the development. “Due diligence is currently on and Blackstone is evaluating the proposal.” The official, however, could not confirm the participation of any other private equity player in the fund-raising exercise.

The equity infusion, according to the Monnet Ispat official, is Rs 1,273 crore and the balance will be debt. “The investment from Blackstone is being pursued for the equity component,” said the official.

In an email response to DNA Money on January 6, 2010, a Monnet Ispat spokesperson had said that the company is tapping the private equity segment to part-finance the project and is in talks with some funds for a possible stake dilution.

It is however, unclear whether Monnet will bring in an additional PE participation for the balance Rs 1,000 crore (equity component) or infuse the funds through internal accruals.

Of the debt component of Rs 3,819 crore, company sources told DNA that IDFC, with a commitment of Rs 400 crore, is leading the 21-bank consortium that will fund it. Other banks that are part of the consortium are Punjab National Bank, Oriental Bank of Commerce, Central Bank of India, Bank of Baroda, State Bank of Hyderabad, State Bank of Mysore and State Bank of Patiala.