Lakshmi Mittal and Farallon Capital join forces

Billionaire Lakshmi Mittal and Farallon Capital Management LLC invested a combined $399 million in a power unit of Indiabulls Real Estate Ltd., India's fourth- biggest developer by market value, seeking a share of an industry poised to accelerate in Asia's third-biggest economy.

The developer, partly owned by Goldman Sachs Group Inc. and Merrill Lynch & Co., said it sold 37.5 percent of Sophia Power Company Ltd. Farallon will buy 23.4 percent and Mittal will buy the rest, the company said in an e-mailed statement from Mumbai.

Indiabulls is investing more in electricity as the nation seeks funds to bolster power generation, roads and ports to meet a 9 percent target for economic growth. The world's fastest- growing major economy after China faces a peak electricity shortage of 13 percent and plans to add 78,577 megawatts of capacity in the five years to March 2012.

``There's a significant power deficit in India,'' said Hemindra Hazari, head of research at Karvy Stock Broking Ltd. in Mumbai. `` The outlook is very positive for the sector and it's an exciting business to be in.''

The combined stake bought by Mittal and Farallon will drop to 28.6 percent after a proposed merger between Sophia Power and Indiabulls Power Services Ltd., a fully owned unit of Indiabulls Real Estate, said Ajit Mittal, head of investor relations at Indiabulls Real Estate, in a telephone interview.

Sophia Power Co. is bidding for two thermal power plants with a combined generation capacity of 3,900 megawatts in Maharashtra. The first plant could be commissioned within three years, Mittal said.

Joint Venture

Indiabulls Power Services Ltd. is forming a joint venture with the government of Arunachal Pradesh, in India's northeast, to set up four hydro-electricity projects to generate 300 megawatts.

Indiabulls Real Estate may raise $1.2 billion selling shares in a proposed investment trust to be listed on the Singapore Stock Exchange, two people familiar with the plan said earlier this month.

Shares of the real estate company have more than doubled since it listed in March after being separated from Indiabulls Financial Services Ltd. Lakshmi Mittal, Citigroup Inc. and Merrill Lynch are among shareholders of the financial services company.

Indiabulls Real Estate rose 5.2 percent to 656.55 rupees on the Bombay Stock Exchange at the 3:30 p.m. close. The developer has projects covering 10,000 acres of land, according to its Web site. It is building office space in central Mumbai, a special economic zone at Raigarh near Mumbai and a residential project in New Delhi, among others.

The company, which also plans to open 30 shopping malls in a year, raised $400 million selling shares overseas in July last year.