Gains access toUS$19-bn worth of transmission market from 2020-29 in Brazil with thisacquisition

Kalpataru Power& Transmission has acquired 51 per cent stake in Brazilian EPC company, FasttelEngenharia for US$8.8-mn. Of this, US$4.7-mn will be paid for acquiring shares from existingshareholders and US$4.1-mn will be infused into Fasttel for issuance of newequity shares to Kalpataru Brazil.

As per the company, upon infusion of US$4.1-mnas new equity, Fasttel is expected to be minimal net debt company. Post threeyears, Kalpataru Brazil will have an option to buy an additional 29 per centshare in the company. The transaction is likely to be funded through KPTL’sinternal accruals and is expected to close by the end of Q1FY22.

With thisacquisition, Kalpataru Power plans to get access to the lucrative Brazilian,and other Latin American markets. Brazilian market investment towardstransmission has been projected at US$19-bn between 2020-29. With thisacquisition, the company will also gain expertise to execute 750kv substationand transmission line.

Compared to otherdomestic peers, Kalpataru did not have any major exposure to the Lat-Am marketdue to its absence there. But, with this acquisition, it has closed this gap.

The Brazilian power sector investments for2010-2019 have been US$100-bn of which the addressable market was thetransmission portion at US$25-bn. For 2020-2029, investments in Brazilian powersector are estimated at US$102-bn. Of this, the addressable portion intransmission portion is estimated at ~19 per cent of US$19-bn.