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16/09/2008 KEC International could consider US targets worth up to USD 150m, MD says
Proprietary Intelligence

Target The Goldfield C orp Bidder KEC International Limited Target Primoris Services C orporation Bidder KEC International Limited Sectors SubSectors Intel Type Countries Energy Electrical power transmission



KEC International, a listed Indian electricity transmission company, could look at potential targets in the US with an expected deal value of up to USD 150m. According to Ramesh C handak, MD, KEC International, the company has hired an external advisor in the US to scout for targets, but he declined to name the firm. He noted, however, that it was not an exclusive arrangement and that the company would be open to approaches from other financial advisors regarding potential targets. KEC has looked at nearly 20 targets, he said, adding that the company has not been able to strike a deal because either the size was not right or the vendor's price was too high. He said that KEC is looking for a company that has experience in the construction of transmission lines. We are aware that these companies could come up with other construction skills as well. However, we need a target that has construction experience of a minimum 45kv to 500kv transmission line, he said. Utility companies in US are expected to spend over USD 45bn in laying new transmission lines, according to C handak. We are not concerned about the geography. It could be anywhere in US, he added. He also said that the company would be open to looking at targets worth USD 75m to USD 150m. However, he noted that the company was willing to consider targets that were larger than this price range. We can put together resources for a larger target if it is the right fit, he said. In the US, one listed company that constructs transmission lines is Goldfield C orp, which has a current market capitalization of USD 12.2m. Goldfield, which is based in Melbourne, Florida, provides electrical construction and maintenance services in the energy infrastructure industry, and is focused on the southeastern US. The company was not immediately available for an interview, a spokesperson said. Primoris Services C orp, a listed, Lake Forest, C alifornia-based provider of various services, including construction for the utility industry, has a market cap of USD 50m, but the company could not immediately be reached for comment. Primoris told this news service in May that it would seek acquisitions in C alifornia and Florida. Larger providers of power line construction services include Quanta Services, MasTec and Dycom Industries, which have market caps of USD 4.92bn, USD 981m, and USD 547m, respectively. KEC International follows discounted cash flow (DC F), earnings multiple and net asset value as parameters for evaluating a target, C handak said. These factors could vary according to the size of the company and management resources, he added. KEC International generated revenue of USD 600m for the year to March 2008.

Bolt on/Opportunistic C ross Border India USA

Intel. Grade Strong evidence Intelligence 695402 ID

Source Value

Proprietary Intelligence GBP 42m (minimum deal size)

Stake Value 100%