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    I Squared Capital invests $200mn in AG&P City Gas

Summary

AG&P City Gas is developing twelve city gas distribution networks in India under the brand name AG&P Pratham.

by: Shardul Sharma

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I Squared Capital invests $200mn in AG&P City Gas

US-based I Squared Capital has invested $200mn in AG&P City Gas, which operates city gas distribution business in India, it said on August 22.

I Squared, through its ISQ Global Infrastructure Fund III and ISQ Growth Markets Infrastructure Fund, has invested the $200mn as a first tranche of a $300mn equity raise in AG&P City Gas.

AG&P City Gas is developing twelve city gas distribution networks in India under the brand name AG&P Pratham. It was previously owned wholly by AG&P, a Singapore-based company.

In its twelve concessions, AG&P City Gas is responsible for developing and operating compressed natural gas (CNG) stations for vehicles, piped natural gas to homes, and the distribution of LNG to industrial and commercial customers. City gas projects benefit from marketing exclusivity in their designated areas for eight to ten years and construction exclusivity of related infrastructure for 25 years.

“Along with AG&P, I Squared Capital was one of the early foreign institutional investors in the Indian city gas sector and is committed to helping the country achieve its target of having 15% of natural gas in its primary energy mix by 2030,” said Gautam Bhandari, managing partner at I Squared Capital. “We plan to deploy up to $1.3bn in capex to build out the distribution networks.”

AG&P Group CEO Joseph Sigelman said the AG&P City Gas network will continue to grow to serve millions of customers in their homes with clean, affordable, safe fuel as India’s middle-class advances in size and purchasing power.

“AG&P City Gas will simultaneously continue to build 1,500 CNG stations so that cars, taxis, and buses can transition seamlessly to run on clean fuel. AG&P City Gas will give the opportunity for small and large local companies to use cleaner and more affordable natural gas, mostly for the first time, a big competitive advantage for the government of India’s ambitious Atmanirbhar (self-reliant) India programme,” said Sigelman.

I Squared said the transaction builds upon its experience in developing city gas infrastructure in India through its Think Gas platform.

“AG&P City Gas and Think Gas are geographically complementary and will operate as independent companies with separate management teams,” said Harsh Agrawal, partner at I Squared Capital.

“These two companies form one of the largest private city gas portfolios in India with 18 concessions serving approximately 85mn people across nine states with a planned capital expenditure of over $1.3bn for AG&P City Gas,” Agarwal added.