Construction firm Gammon India has announced acquisition of a 50% stake
in Italy-based power firm Sofinter for an undisclosed sum. The deal is
Gammon’s third acquisition in the Italian market this year.
In a regulatory filing, Gammon has informed the Bombay Stock Exchange that its step down offshore subsidiary has acquired 50% equity of Sofinter SpA, the holding company of Ansaldo Caldaie SpA, one of the major power equipment suppliers in Italy. Though Gammon did not disclose the deal size, source close to the deal said it’s around $70 million.
The deal would also help Gammon to consolidate its presence in Indian power sector as Ansaldo Caldaie Boilder, the Indian subsidiary of Ansaldo Caldaie, has begun operations in India. The Italian company is in the process of setting up a boiler-manufacturing unit in Tuticorin in Tamil Nadu for overall investment of up to $20 million. It has acquired land, about 25 km from the Tuticorin Port. The manufacturing unit is designed to cater to the Indian market to begin with and later the Asian markets. The Chennai-based company so far received orders worth Rs 600 crore for the supply of boilers and components to Indian power utilities.
However, the acquisition has not gone down well in the stock market. The Gammon stock slipped 6% to close at Rs 213.65 on the NSE. In June this year, Gammon had acquired a majority stake in Italian turbine maker Franco Tosi Meccanica for euro 40 million and a 50% equity stake in power sector services firm Sadelmi for $7.5 million. Sofinter is a highly specialised company operating in the sector of steam and power generation using various fuels, biomass and municipal and industrial waste. Gammon plans to build large power projects in India on the strength of its overseas acquisitions.
The local electrical market is likely to see considerable activity as the government is planning to add close to 80,000 megawatts over the next five years. GMR Infrastructure recently acquired a 50% stake in US-based power firm Intragen for over $1 billion. India, which faces a peak power shortage of 14%, has announced plans to boost generating capacity by more than half by 2012. This has led to a number of investments in power projects, fuelling demand for capital goods firms.
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