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Ushdev International in Talks with PE Firms

Mumbai-based metals trader and wind farm operator Ushdev International is attempting to raised between $20 million and $40 million from private equity investors, Reuters reported Thursday. The company is talking with unnamed private investors about an expansion capital round, and considering selling up to 20% equity in the company, Reuters reported.

(Reuters) – Metals trader and wind farm operator Ushdev International is talking to private equity investors to raise $20-$40 million to fund its expansion, as it plans to acquire domestic wind farms and foray into mining, a top official said on Thursday.

The Mumbai-based firm, that counts global firms like Glencore , Arcelor Mittal , Sumitomo Metals as clients, is talking to a couple of private equity investors to sell 10-20 percent equity and hopes to close a deal in the near term, Managing Director Prateek Gupta said.

The firm, which handled 6 percent of the traded steel in the country during April-December last year, is expanding its core metals trading and wind power generation businesses via organic and inorganic routes, Gupta, a third-generation entrepreneur, told Reuters in an interview.

“We are currently considering how to take this (wind) business further. We are in the process of a large acquisition of around 100 MW in the Indian market.”

Ushdev, which has a portfolio of 31 MW of wind farms spread across five states, sells about 75 percent of the power produced via long term contracts with state-run utilities and private firms and the remainder in the open market.

Conventionally, per-megawatt investments into wind farms in India is estimated at about 60 million rupees.

Ushdev, which traditionally focussed on ferrous metals trading, is now expanding into non-ferrous metals trading, and is planning to buy stakes in overseas mines for nickel, coal, iron ore and rare earths, he added.

The company is eyeing Indonesia and Australia for coal, Sudan for iron ore and nickel, Mangolia for gold and rare earths and is scrutinising several proposals from mine owners from these countries, Gupta said.

“In the mining area we are looking in a big way and the question will be what quantum, with which partner and what will be the deal… We would want something that is practically on ground or that will come on ground in 2-3 months.”

The firm currently derives 10 percent of its revenue from exports, 20-30 percent from imports and rest from domestic trade. It exports non-ferrous metals to the U.S. and Europe and aims to boost iron ore exports in this fiscal. Its domestic clients include Jindal Steel , Hindalco , and Sterlite .

“We would like to step up on raw materials business and long products as they are higher margins and lower volumes,” Gupta added.

The firm, which derives 30 percent of its bottomline from sale of power, but 99 percent of revenue from trading operations, had a 60-billion-rupees order book at the end of March 2011, executable over a period of 18 months, Gupta added.

It had posted a 62 percent rise in consolidated net profit in the fiscal year ended March at 437.5 million rupees on net sales growth of 88 percent to 32.6 billion rupees.

Shares in the firm, valued at $191 million, have fallen 22 percent so far this year, compared to the benchmark index’s

18 percent fall. On Thursday, the shares closed 0.29 percent down in a Mumbai market that ended up 1 percent.

(Editing by Sunil Nair)