MEIL's MD taps private credit funds Elham, DK, Oaktree to raise Rs 1,500 crore

Mumbai: PV Krishna Reddy, managing director of Megha Engineering & Infrastructures (MEIL), is in talks with Elham Credit Partners, Davidson Kempner, and Oaktree Capital, among others to raise about ₹1,500 crore in debt financing as part of a broader strategy to mobilise funds to buy out his uncle and patriarch PP Reddy's shareholding in the group, said people familiar with the matter. These funds are currently engaged in due diligence and are expected to take a final decision by August, the people said.

ET was the first to report on June 9 that the two principal shareholders of Hyderabad-based MEIL, the Reddy uncle-nephew duo, are finalising a family settlement which will lead to Krishna Reddy buying out uncle Pamireddy Pitchi Reddy's controlling 51% equity holding for ₹12,000-₹15,000 crore, three decades after the two began their entrepreneurial journey manufacturing and supplying small pipes to municipalities. Krishna owns the remaining 49%. MEIL has since emerged as a $5-billion, privately-held infrastructure conglomerate.

Reddy has been weighing options between banks and private credit funds to raise ₹1,500 crore, eventually opting for latter as pricing is in line with expectations. The funds are likely to be raised at an internal rate of return (IRR) of 16.5-17%, a banker familiar with the matter said, adding that the funding would be required by next month. The money will be raised against Reddy's shares as collateral.

However, there is still no guarantee that Reddy will agree on the final terms, despite having an imminent payment deadline, said the people mentioned above. "While discussions initiated in the beginning of the year, talks moved this month, and due diligence is still underway," one of the persons said. The settlement has to be wrapped up by March 2027. Against payment schedule for ₹15,000 crore amount, only ₹1,000 crore has been paid.

Agencies

Spokespeople at Oaktree and Davidson Kempner declined to comment and Elham Credit did not respond to requests for comment. Krishna Reddy could not be reached for comment. MEIL, known for its strong presence in irrigation and drinking water projects which still account for 52% of its total order book, has diversified into new sectors such as roads, power, and hydrocarbons, which contribute 18%, 13%, and 11% respectively of outstanding orders, Acuite Ratings said in a report in January.

The company, which was the second highest buyer of electoral bonds in 2024 elections, had seen consolidated revenue grow 34% to ₹42,442 crore in FY24 from ₹31,766 crore in FY23.

Growth was primarily led by a strong performance in its standalone EPC business, which rose to Rs 31,904 crore in FY24 from Rs 25,838 crore the previous year.

Standalone order book grow to Rs 2,28,134 crore as of November 30, 2024, 7.15 times more than its FY24 standalone revenue. The company also secured fresh orders worth Rs 21,592 crore till December 2025.

Other than tapping the funds, Reddy’s plans to raise the requisite funds includes partial or full stake sales in a raft of businesses or assets like a power transmission project in western Uttar Pradesh, for which he has been in dialogue with Adani Group and prior to that Brookfield.

Through this single sale of the interstate transmission lines and the substation network, he is aiming to raise Rs 7,000 crore, or nearly half of the total amount needed.

Negotiations have also been taking place with some of the largest global funds to divest the city gas unit. Megha City Gas is operational in 62 districts across eight states including Punjab, Maharashtra, Madhya Pradesh, Andhra Pradesh and Tamil Nadu, ET had reported. The operations and maintenance wing of Olectra Greentech, the only listed entity of the group, may also be hived off to raise funds, said the people cited. Megha Engineering is the promoter of the company that makes e-buses and composite polymer insulators with a 50% stake.