3i India Private Ltd, the Indian arm of global private equity major 3i Group Plc, has become the front-runner to acquire about 20-25% stake in Hyderabad-based Ind-Barath Power Infra Pvt Ltd (IBPIL) for about $100 million. Ind Barath has already received investments of Rs 300 crore from Citigroup Ventures and UTI Ventures.

Though 3i could be the front runner to clinch the deal, other players, such as Actis, are also said to be in the race to acquire the stake, sources close to the development told FE.

Projects in the pipeline make Ind-Barath attractive. Recently, Ind-Barath Power (Karwar) Ltd’s 450mw coal-based power project in Karnataka has received environmental clearance from the MoEF. Ind-Barath Energy Utkal has plans to set up a 20mw biomass power plant in Orissa at an investment of Rs 80 crore. Ind-Barath has also reportedly started the work on its Rs 3,150-crore coal-based power plant in Deogarh district, Orissa, with a capacity of 700mw. IBPIL officials could not be reached, while 3i officials were unavailable for comments.

The $1.2-billion 3i India Infrastructure Fund, which closed in March 2008, focuses on investments in the power, port, road and air sectors. In February, it invested around $161 million for a minority stake in Krishnapatnam Port Company Ltd, promoted by Hyderabad-based Navayuga Group. During March, 3i had sold its 1.42% stake in Mundra Port and Special Economic Zone Ltd (MPSEZ) through the open market for about Rs 165 crore. The IPO of Adani Power, where 3i has a minority stake, had oversubscribed more than 21 times last month.

Through the $227-million deal with Adani Power, 3i had made the first investment from its Indian infrastructure fund in 2007 and in the same year, the fund had invested $101 million for a minority stake in Soma Enterprise, a Hyderabad-based engineering and construction firm.

The power & energy sector witnessed four deals worth $127 million for the first half of 2009. Investment of $77 million by IDFC Project Equity in Essar Power is the top deal in the sector during the first half of 2009.

Smaller deals such as $30-million by Pangea Capital in Cobol Technologies, investments by Axis PE and IL&FS in Shalivahana Green Energy also took place.

According to a recent Grant Thornton study, PE investments in India have witnessed a downward trend during 2009. PE deals have declined from $6.93 billion (185 deals in H1 2008) to $2.89 billion (93 deals in H1 2009).