IDFC Private Equity, IL&FS Investment Managers and the Asian Development Bank (ADB) sold their cumulative 50 percent stake in Kanpur-based Central UP Gas (CUGL) to Indraprastha Gas for about Rs 70 crore.
These three organisations invested Rs 30 crore in CUGL in 2006. While IDFC Private Equity and IL&FS Investment Managers held 15 percent stake each, ADB held 20 percent stake.
Following the acquisition of the stake, Indraprastha Gas, which supplies fuel in Delhi and its neighbourhood, will get access to the Kanpur and Bareilly markets of Uttar Pradesh.
The three investors exited the company with about a 17 percent rate of return, multiplying their investment 2.6 times.
Industry players feel that CUGL is a logical fit for Indraprastha Gas, which dominates in the National Capital Region. CUGL opens a new market for them.
While IGL will hold 50 percent stake in CUGL, BPCL and GAIL will hold 25 percent stake each now.
Meanwhile, IDFC Private Equity is optimistic on gas distribution firms owing to natural market demand and scalability.