Rising star: KEF

Sunday, October 05, 2008 | Posted by: Grant Thornton
Categories: | Tags: India, investment, global, India Watch, funds, infrastructure, Philip Secrett, aim, KSK

Energy investor raises record funds on AIM, in double quick time. KSK Emerging India Energy Fund Ltd (KEF) commenced dealings on the market in June, achieving gross proceeds of £101 million, a figure not likely to be surpassed this year.

Energy investor raises record funds on AIM in ‘double quick’ time.

As global financial markets face the toughest conditions for decades, the listing of a power and energy investment company, for whom Grant Thornton acted as nominated adviser, is expected to have raised the largest cash sum on AIM during the whole of 2008.

KSK Emerging India Energy Fund Ltd (KEF) commenced dealings on the market in June, achieving gross proceeds of £101 million, a figure not likely to be surpassed this year. It was established to make investments in businesses operating across the Indian power and energy sector value chain, from utilities to equipment manufacturing, including those involved with infrastructure development.

As a closed-ended investment company registered in Guernsey, KEF also opted to dual list on the Channel Islands Stock Exchange (CISX). According to Grant Thornton Capital Markets Partner, Philip Secrett, the dual listing had clear advantages:

“AIM is the acknowledged destination for closed-end funds focused on emerging markets, largely because of the flexible regulatory environment it offers. We advised KEF that a CISX listing would also broaden the fund’s investor base and stimulate secondary market liquidity.”

Another key advantage of AIM was one of speed. KEF imposed a necessarily aggressive timetable for getting to market because competing funds were also looking to raise money for the Indian power sector.

As Philip Secrett explains: “We’d normally expect a listing of this kind to take slightly longer. We delivered it in 12 weeks, in spite of the additional complexity required by the additional CISX listing and the cross-border, multi-practice issues we had to contend with.”

KEF announced its first investment in July with the acquisition of a 3% holding in Konaseema Gas Power Ltd, worth US$6.4 million. It is currently in the advanced stages of negotiating a major investment of up to US$75 million in another Indian power developer, Athena.

Commenting earlier this year, Tanmay Das, KEF’s Investment Manager and a non-executive director of the company, said: “We were delighted with the market’s response to our strategy, which placed us extremely well to launch the fund and move quickly to invest the capital raised.”

Philip Secrett concludes: “Inevitably, the global financial crisis is delaying all deals but the fundamental strength of KEF, as evidenced by its success of its placing on AIM, points to an exciting future for the fund.”

Grant Thornton also advised KEF on tax structuring and acted as reporting accountant.

Philip Secrett
Partner, Capital Markets
For Grant Thornton UK LLP