P.V. Krishna Reddy, the managing director of Megha Engineering & Infrastructures (MEIL), has secured a substantial private credit facility of up to $1.2 billion (approximately Rs 10,000 crore) from Oaktree Capital Management. This financing is intended to facilitate the buyout of his uncle, P.P. Reddy's 49% shareholding in the rapidly growing conglomerate. The flagship company, MEIL, is valued at nearly $3.6 billion (Rs 30,000 crore), with Krishna Reddy's 51% controlling stake valued at around $1.8 billion and his uncle's 49% stake at $1.6 billion.
While the full $1.2 billion facility is available until March 2027, Krishna Reddy plans to initially draw between $240 million and $360 million (Rs 2,000-3,000 crore). To raise the remaining funds for the buyout and reduce reliance on the Oaktree loan, he intends to employ a mix of strategies. These include asset sales to strategic investors, such as a power transmission project in Uttar Pradesh which he hopes will fetch $840 million (Rs 7,000 crore) from potential buyers like Adani Group. He is also exploring stake sales in other ventures like Megha City Gas and the operations and maintenance arm of Olectra Greentech, the group's only listed entity, and considering monetizing road projects through an infrastructure investment trust or leveraging cash flows.
MEIL has expanded significantly, boasting an order book of $27.6 billion (Rs 2.3 lakh crore), second only to Larsen & Toubro. The group plans a capital expenditure of $1.8 billion to $2.04 billion (Rs 15,000-17,000 crore) over the next few years for roads, solar projects, and transmission assets, to be funded through equity contributions, debt, and internal cash accruals. The Oaktree loan, secured against Krishna Reddy's shares in the company, will carry an interest rate in the "mid-teens."
