Cops probe PEs in battle for power co Investors In Asian Genco Trigger Takeover Clause, Claim Asset Alienation A clutch of marquee global investors — Morgan Stanley, Goldman Sachs, General Atlantic Partners and Everstone Capital — are facing a criminal investigation by the Hyderabad police in a corporate takeover battle gone ugly. The police have sought interrogation of the directors on the board of Asian Genco, a power generation company with close links to Seemandhra political bigwigs. Four years ago, the foreign investors pumped $425 million into the Singapore-incorporated Asian Genco, which controlled energy plants in coastal Seemandhra, Sikkim and with aggressive expansion plans in the Indian energy sector. It was the largest private equity investment in the power sector and was touted as a defining deal in India’s infrastructure build-up post the Lehman Brothers collapse. The investor consortium and the promoters led by T V Vijaykumar have sought arbitration in Singapore courts for management control. Investors who had majority shares but not the voting rights wanted complete management rights citing promoter moves to alienate assets under the parent company. They also cited significant cost overruns and inordinate delays in executing the projects, among other reasons, for the takeover move. But little known Hyderabad-based company Cobalt Power, an ally of the promoter, which invested Rs 200 crore in the Seemandhra thermal power project, recently moved a magistrate court alleging that the foreign investors were wrongly taking charge and appropriating third-party investments. The lower court allowed the petition and directed the state police to start a probe. Asian Genco VC Krishna V Tatineni said he would not comment on the dispute, which he said “is an internal matter between the shareholders”. When contacted, some private equity investors that are part of the consortium declined to comment, while others could not be reached immediately. The police have sought interrogation of directors representing heavyweight foreign investors at a time when India has struggled to rekindle global investor interest on the back of slowing growth and poor corporate governance. The investor consortium, which also included Ashmore and Norvest Venture Partners, set off the takeover move after the promoter began inducting local investors like Cobalt into specific projects. The foreign investors alleged such moves diluted their ownership. Investors were to hold 51% stake in each project by virtue of their majority shares in the holding company Asian Genco Pte Ltd. But the entry of Cobalt, pushed through by the promoters, reduced the foreign investors to a minority in East Coast Energy Private Ltd, the upcoming thermal project in coastal Seemandhra. This development is the latest and the most serious in a spate of recent flare-ups between private equity investors and Indian promoters, which has seriously dented the confidence of foreign risk capital providers who have put to work over $50 billion in growth companies. HIGH TENSION Asian Genco is a Singaporeincorporated power co with ties to top politicians in Seemandhra and power plants on the east coast & Sikkim The power generation firm got $425m from marquee investors like Morgan Stanley, Goldman Sachs, GA Partners & Everstone Cap 4 years ago The investors who had majority stake but no voting rights took the promoters led by T V Vijaykumar to Singapore courts for management control But H’bad co Cobalt Power, which invested 200cr in Seemandhra thermal plant, moved a magistrate court against foreign investors’ taking charge wrongfully The magistrate court has admitted the plea and directed the police to move in and launch a probe.
Posted on: Fri, 09 May 2014 11:17:55 +0000
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