A TVS Capital Funds-led consortium, which includes Kris S Gopalakrishnan, former Infosys executive Vice-Chairman, and Lakshmi Narayanan, Vice-Chairman of Cognizant, has bought the 25.64 per cent stake of Financial Technologies in Indian Energy Exchange for ₹576.84 crore. With this, Financial Technologies will completely exit Indian Energy Exchange.
FTIL said it had entered into an agreement with TVS Shriram Growth Fund 1, Kris S Gopalakrishnan, Lakshmi Narayanan, Rajeev Gupta, Dalmia Cement Bharat Power Ventures, Kiran Vyapar Ltd, TVS Capital Funds and Agri Power and Engineering Solutions. The investors have each put in between Rs. 20 crore and Rs. 50 crore.
Rajeev Gupta, a board member of TVS Capital Funds, was earlier Managing Director of Carlyle Asia Partners and Head of Carlyle India Buyout Team. Kiran Vyapar is a non-banking finance company and part of the LN Bangur group.
Financial Technologies was directed by the Central Electricity Regulatory Commission to sell its stake after it was declared not 'fit and proper' to hold stakes in exchanges. FTIL was censured by regulators after one of its group companies, National Spot Exchange Ltd, failed to settle trade worth ₹5,600 crore entered on its platform. It recently sold its complete stake of 15 per cent in Multi Commodity Exchange to Kotak Bank for ₹459 crore.
Without prejudice to the legal rights and remedies, the IEX transaction is subject to fulfilment of certain condition precedents, including buyout of the application software and other technology for its own use only by IEX, said FTIL.
Subject to regulatory approval, the transaction is expected to close within 30 days, unless extended by all parties, it added.
Apart from FTIL, other shareholders in the exchange include PTC India Financial Services, Multiples Private Equity Fund, Multiples Private Equity Fund I, Bessemer Venture Partners Trust and Lightspeed Venture Partners VIII Mauritius.
The exchange is an online platform for physical delivery of electricity. It enables efficient price discovery and price risk management for participants of the electricity market, including industries eligible for open access.
IEX connects over 2,800 open access consumers through 3,000 participants to manage their power portfolio in a competitive way. It has over 800 registered private generators.
Gopal Srinivasan, Chairman and Managing Director, TVS Capital Funds, said the fund had been looking at investment opportunities in the financial services and exchanges space.
Through its various funds, it had picked up stake in RBL (Ratnakar Bank Ltd), City Union Bank and Karur Vysya Bank. The decision to buy into IEX, on whose platform a bulk of the electricity was traded, was in keeping with this strategy. There were huge investments lined up in the power sector, including in generation and transmission.
With open access becoming a reality across the country, more electricity would get traded and IEX would be able to capitalise on this.
"With open access taking off, the role of an exchange will only increase," said Srinivasan.
IEX had an asset light model and its technology platform was second to none, he said. Also, with separation of carrier and content – the transmission line belonging to one company and the electricity being supplied by another – the TVS Capital led consortium felt that this was not an investment opportunity that could be missed.
Source- Business line