Think Gas Distribution and AG&P Pratham are I Squared’s Indian gas distribution businesses. Credit: Parilov via Shutterstock.

Mubadala Investment and multiple Japanese investors including Sumitomo are looking to buy a 30% stake in I Squared Capital’s natural gas distribution business in India, reported the Economic Times, citing sources.

I Squared is a US private equity company specialising in infrastructure investments.

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The company operates in the Indian gas distribution business via Think Gas Distribution and AG&P Pratham.

“I Squared will merge Think Gas and AG&P city gas businesses and the investor will pick up a stake in the merged entity through a mix of primary and secondary investment,” one of the sources was quoted by the publication as saying.

The merged entity could be valued at more than $1bn, the source said, adding that “talks are on with investors such as Mubadala and a couple of Japanese investors.”

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I Squared has contacted investment bank Barclays to advise on the sale process, the sources said.

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Think Gas, which was incorporated by I Squared in 2018, caters to the residential, commercial, industrial, and automotive sectors by supplying natural gas across 13 districts in India.

Meanwhile, AG&P has 12 exclusive 25-year concessions in Rajasthan, Andhra Pradesh, Karnataka, Kerala, and Tamil Nadu.

I Squared is said to own the biggest such entity-owned city gas distribution system in India, while Adani Total Gas and Torrent Gas are major private players in the same sector.

State-owned companies operating in the sector are Mahanagar Gas and Indraprastha Gas.

Mubadala, the sovereign wealth fund of the United Arab Emirates, recently acquired a substantial stake in Cube Highways, a roads infrastructure investment trust supported by I Squared Capital, for approximately $300m.

Mubadala’s other investments in India include Reliance Retail, Jio Platforms, and Tata Power Renewables.