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Construction : Deals | July 2013 | Source : Construction Update

GMR Infra gets breather from PEs

GMR Infrastructure may heave a sigh of relief as a group of private equity (PE) investors refrained from exercising put option on the shares held by these institutions in GMR Power.

During early 2010, Temasek, IDFC Private Equity, Argonaut Ventures and Ascent Capital had committed close to $300 million into GMR Power, the holding company for all power projects of GMR Infrastructure.

A put option gives the holder the right to sell securities at a specified price within a limited period. When an option is exercised by the holder, the shareholder will be obligated to buy or sell the shares at the predetermined price.

GMR Infra, which is in the process of infusing equity into its power segment, received a shot in the arm with the decision of the PEs. If the PE investors had exercised the put option, GMR would have have to buy back from them, further straining their balance sheet, at a time when the company is looking to infuse as much as Rs 1,700 crore through the equity route to fuel its power projects.

GMR Infra is trying to reduce its debt by selling some of its assets. The power vertical, which contributes around 25 per cent of total group revenues of close to Rs 10,000 crore, has been facing intense problems over the past many quarters at a couple of its operational plants as gas was not available.

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