Buyers to pump in $616 million equity, take over project debt

A consortium led by TAQA, the international energy and water company from Abu Dhabi, has agreed to acquire two hydro power plants with 1,391 MW capacity in Himachal Pradesh from Jaiprakash Power Ventures Ltd, a subsidiary of Indian infrastructure conglomerate Jaypee Group.

The acquisition is expected to close in 2014 and is subject to regulatory and third party approvals.

“The enterprise value of the deal is pegged at around $1.6 billion comprising debt and equity. The negotiations were finalised on Saturday night,” said an official privy to the development. The power plants are Baspa Stage II and Karcham Wangtoo.

TAQA, which holds a 51 per cent stake in the consortium, will have control of operations and management of both facilities under the proposed deal. The remaining equity will be held by one of Canada’s largest institutional investors (39 per cent) and IDFC Alternatives’ India Infrastructure Fund II (10 per cent).

“The equity invested by the consortium in the acquisition of the two hydroelectric plants will be nearly $616 million (₹3,820 crore), of which 51 per cent is from TAQA. The consortium will also acquire the assets’ non-recourse project debt,” the UAE-based firm said in a statement.

Ernst & Young (EY) were the advisors to the deal.

Following the completion of the transaction, TAQA’s gross operational power generation capacity in India will be 1,741 MW, consisting of three hydroelectric facilities and one lignite power plant.

“India’s economic growth depends on having ample and reliable energy supply. TAQA is pleased to add these two high quality hydro power assets to our growing India business and to support India’s economic growth,” said Frank Perez, TAQA’s Executive Officer and Head of Global Power & Water.

Paring debt

In September 2013, Jaypee Group, with interests ranging from engineering and construction to cement and sports, sold its Gujarat cement unit for ₹3,800 crore to the Aditya Birla Group’s UltraTech Cement.

The Group is aiming to pare its debt by at least ₹15,000 crore in the current fiscal year.

It has around ₹19,000-20,000 crore debt on the books of Jaiprakash Power Ventures.

Three projects

The Jaypee Group has three operating hydro-power projects under Jaiprakash Power Ventures Ltd.

These include the 300-MW Baspa II (Himachal Pradesh); the 400-MW Vishnuprayag (Uttarkhand) and the 1,000-MW Karcham-Wangtoo (Himachal Pradesh).

The Vishnuprayag power station, located across river Alaknanda at Chamoli in Uttarakhand, was destroyed during the floods and landslides in June 2013.

(This article was published on March 2, 2014)
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