Baring Private Equity Partners India, has bought a minority stake in Cethar Vessels, India’s Trichy-based second largest manufacturer of thermal power boilers, for around Rs 405 crore ($90 million).

The second largest investment by Baring in India will be used by Cethar Vessels for setting up facilities to manufacture steam turbine and generator, acquiring land for developing power plants and enhancing the manufacturing capabilities for super critical boilers. IDFC Capital was the adviser for this private equity transaction.

Karthik Ranganathan, partner, Baring India, told Financial Chronicle, “Given the current demand supply mismatch, we see tremendous growth opportunity in the sector. Besides, Cethar as a company has strong potential to grow further. We plan to stay invested for a long-term period as we invest for at least 5-7 years in power sector.”

“If the opportunity arises we would like to buy further stake in the company,” Ranganathan said.

Baring India has interests in energy, power, both generation and equipment segment, and is evaluating some other sectors, which are promising to be good investment in future like, financial services and consumer segments, Ranganathan said.

Cethar Vessels (CVL), an over $500 million company, has gained significant reputation in the design, manufacture and construction of thermal power plants in India. The company is presently executing power plants of unit sizes up to 350 MW and is in the process of getting orders for super critical boilers in the capacity range of 660 to 800 mw.

K Subburaj, founder and chairman, Cethar Vessels said, “We are sure that this partnership (with Baring Private Equity) will take the company to greater heights; both in India and other global markets.”

“The investment in Cethar Vessels marks the largest investment from Baring India Funds till date in the country and is testament to the strong competitive engineering and technological capabilities of the company,” said Rahul Bhasin, managing partner, Baring Private Equity.