India Industrial Growth Fund

Frontline Strategy's IIG Fund takes 26% stake in Shriram SEPL Composites

  • Newly launched India Industrial Growth Fund's first investment in the SME space
  • Company will make next-generation GRP pipes to replace steel/concrete pipes
  • GRP pipes are used in water and sewage, and on-ground oil and gas pipelines
  • JV to combine Shriram EPC's client network and project management skills with SEPL's technology
  • Shriram SEPL starting order book over INR 1.0 billion

Mumbai, 25 June 2008:Mauritius-based Frontline Strategy Ltd, a Fabiani Family Office-anchored asset management company with prime focus on private equity investments, today announced the first investment of its recently launched, second SME-specific, India Industrial Growth Fund, with a 26% equity stake in Shriram SEPL Composites Private Limited, a joint venture of Shriram EPC and Strategic Engineering Private Ltd.

Shriram SEPL will manufacture next generation glass fiber reinforced plastic (GRP) pipes, the internationally preferred alternative to steel and concrete pipes for water and sewage, and on-ground oil and gas pipelines.

Leveraging Shriram EPC's rich project experience and outstanding client network, Shriram SEPL starts with an order book of over INR 1.0 billion, which has been procured with the help of Shriram EPC.

Shriram SEPL will draw down on the technical expertise of Dr M Ramakrishnan, who was in charge of design, development, and production at SEPL, and brings several years of expertise in composite materials including pipes and high pressure vessels. Dr Ramakrishnan is an expert member of the Indian Standards (IS) Committee for evolving standards for high pressure composite cylinders and on plastic and composite pipes. The new company will also be able to leverage the over 30 years of domestic and international marketing and general management expertise of Mr T N Prasad, who is the Managing Director of SEPL. Between them, Dr Ramakrishnan and Mr Prasad have over 50 years of industrial and marketing experience.

Comment by Atim Kabra, Managing Partner, Frontline Strategy The investment in Shriram SEPL Composites is a continuation of Frontline Strategy's focus on investing in companies with global scope and capability, said Atim Kabra, Managing Partner, Frontline Strategy. “Shriram SEPL combines Shriram EPC's proven capability in industrial projects with SEPL's technology expertise to serve India's fast-growing infrastructure development sector, with its large demand for pipes for sewage and water lines.”

Comment by T Shivaraman, Managing Director and CEO, Shriram EPC Given Shriram EPC's significant presence in the municipal services sector, the addition of the GRP pipe manufacturing capacity will significantly strengthen Shriram EPC's product offering, said T Shivaraman, Shriram EPC's Managing Director and CEO.

"We are happy to have Frontline as a long term investor in this company. This is in line with our philosophy of working with partners in our businesses. Such partnerships bring in people who can bring a different perspective to the business and act as a catalyst and sounding board for the operating team. We are very happy with our relationship with Frontline and look forward to building a significant player in this specialized field," Mr Shivaraman said.

Comment by T N Prasad, Managing Director, SEPL The new company Shriram SEPL will leverage the technology expertise and client references built up by SEPL over the last few years and Shriram EPC’s proven strengths in the areas of project sourcing and management, especially in municipal services, said SEPL Managing Director TN Prasad. "The long term partnership with Shriram EPC and Frontline Strategy will allow Shriram SEPL to also expand into newer segments, such as oil and gas, which have huge potential latent demand. We are confident that Shriram SEPL is well set to become the leading player in this fast-growing industry," Mr Prasad said.

About Frontline Strategy Founded in 2000, the Fabiani Family Office-anchored Frontline Strategy Limited (www.frontlinestrategy.com ) is an asset management company with primary focus on private equity investments. The investment management team includes Atim Kabra, Supratim Basu, Sanjay Bhattacharya, and J Venkatadas, with a collective experience of over 100 years in public and private equity, banking, and company operations. Prominent investments of Frontline Strategy's first fund vehicle, Strategic Venture Fund (Mauritius) Ltd, include: CBay Systems & Services, Inc, an early-stage Frontline Strategy investment, and the largest provider of outsourced knowledge processing services for the global healthcare industry, after the acquisition of MedQuist, Inc; Astra Microwave Products Ltd, a manufacturer of high-end microwave

and RF-based components for defense, space and civil telecom applications; Titagarh Wagons Ltd, India's leading private manufacturer of railway wagons; Alfa Transformers Ltd, a manufacturer of power, distribution and furnace (specialty) transformers; Shilpa Medicare Ltd, among India's leading specialty pharmaceutical manufacturers, primarily focusing on custom synthesis and oncology APIs.

About Shriram EPC Limited Shriram EPC Limited (NSE code: SHRIRAMEPC, BSE code: 532945) is among India's leading providers of integrated design, engineering, procurement, construction and project management services for renewable energy projects, process and metallurgical plants, and municipal projects. The company also manufactures of 250 kW wind turbine generators (WTG). Shriram EPC is headquartered in Chennai with offices in Mumbai, New Delhi, Kolkata and Beijing, and WTG and cooling tower factories in Puducherry, Chennai and Umbergaon.

About Strategic Engineering Private Limited Using in-house development and R&D, Strategic Engineering Private Limited (SEPL) manufactures composite glass fibre reinforced plastic (GRP) pipes and pressure vessels targeting India's fast-growing infrastructure development sector that has opened up a huge market for pipes, especially for sewage and water lines.

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