AG&P Pratham and Think Gas Distribution, both backed by I-Squared Capital, are set to merge in a landmark deal valued at over $1.1 billion, as reported by the Economic Times (ET). This strategic move aims to consolidate their market presence and boost competitiveness in India’s city gas distribution (CGD) sector, aligning with the nation’s ambitious goals to increase natural gas’s share in its energy mix to 15 per cent by 2030.
The merger, structured as a stock-for-stock transaction, will see the exchange of shares between the two entities, with I-Squared Capital holding a 100 per cent stake in Think Gas Distribution and a 73 per cent stake in AG&P Pratham. Osaka Gas and a consortium led by Sumitomo Corp, key stakeholders in AG&P Pratham, are poised to inject $200-250 million in primary capital into the merged company to support its growth trajectory.
The approval process for the merger commenced in January, with the European Commission granting approval in February. With shared focus and expertise in CGD operations, the merger is poised to optimize resources and manpower utilization, enhancing operational efficiency.
City gas distribution involves the transportation and distribution of natural gas across various sectors, including domestic, commercial, industrial, and transport segments, through a pipeline network. The combined scale of AG&P Pratham and Think Gas Distribution will enable them to compete effectively with major industry players such as Mahanagar Gas, Gujarat Gas, and Indraprastha Gas.
India’s push to increase the share of natural gas in its energy mix is bolstered by the expansion of CGD networks, which align with efforts to reduce carbon emissions and address climate change challenges. The merger between AG&P Pratham and Think Gas Distribution reflects a significant step towards achieving operational synergy and market competitiveness, positioning the combined entity for sustained growth in India’s dynamic energy landscape.
Upon completion of the merger, I-Squared Capital is expected to hold over 60 per cent of the combined entity, with AG&P retaining up to 15 per cent, and the Osaka Gas and Sumitomo-led consortium holding the remaining 25 per cent. This consolidation of resources and expertise sets the stage for a robust and agile player in India’s evolving energy sector, poised to capitalize on opportunities and contribute to the nation’s sustainable development goals.
