Local arms of Citigroup Venture Capital and Goldman Sachs LP will invest $52 million (Rs 234 crore) in ICSA (India), a Hyderabad software company specialising in solutions for customers in power, oil, gas and water sectors.
Citigroup will pay $30 million to acquire 1.1 million new shares, equivalent to 14 per cent in ICSA, through a preferential allotment of equity, while Goldman Sachs is to extend $22 million to the company through foreign currency convertible bonds. Citigroup would buy the shares at Rs 950 each and Goldman could convert its debentures at Rs 1,250 a share, ICSA managing director G Bala Reddy said.
ICSA, listed on Hyderabad, Mumbai and National Stock Exchanges, has solutions for energy management, energy audit, and control that can be implemented speedily on communication media such as cellular networks. It also has patented products for monitoring pipeline corrosion, theft and pilferage of oil and water.
Analysts see a strong huge demand for ICSA offerings. "There is huge demand for ICSA products as several power projects are coming up not only in the country but across the globe," said Dharmesh Shah, analyst with Mumbai's Mangal Keshav Securities, adding the company's niche products can track transmission and distribution (T&D) losses in power sector, as high as 40 per cent in parts.
ICSA, with an order book position of Rs 1,000 crore, plans to deploy around 50 per cent of the funds from Citigroup and Goldman Sachs for global acquisitions, 30 per cent towards working capital requirements and around 20 per cent on product development, ICSA's Reddy said.
Citigroup Investments India managing director Ajay Relan saw the ICSA investment as a proxy for the potential the power sector holds as India grows its $750 billion national income 8.5 per cent annually. "In this scenario ICSA with its innovative solutions to help check T&D losses assumes great importance."
ICSA shares fell 1.4 per cent to Rs 1,099.25 on the Bombay Stock Exchange that rose 0.1 per cent.
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(With inputs from Reuters)