Jaiprakash Power Ventures Ltd (JPVL) has signed a deal with Abu Dhabi National Energy Company PJSC (TAQA), the Abu Dhabi government’s energy and utilities firm, for selling two hydro-power projects in Himachal Pradesh for Rs 10,500 crore (Rs 105 billion).
The deal, part of the Jaypee Group’s plan to cut Rs 60,000-crore (Rs 600 billion) debt, follows months of negotiations. Last year, Executive Chairman Manoj Gaur had said the group planned to cut its debt by Rs 15,000 crore (Rs 150 billion) through the sale of assets. JPVL has a debt of Rs 19,000 crore (Rs 190 billion).
TAQA will acquire the 300-Mw Baspa-II and the 1,000-Mw Karcham Wangtoo on the Sutlej in one of the largest foreign direct investments in the power sector. “The enterprise value of the deal is close to Rs 10,500 crore. The equity portion is Rs 4,000 crore (Rs 40 billion),” said a person. This indicates a substantial premium for Jaypee, as the total project cost for the two plants is Rs 8,900 crore (Rs 89 billion), including Rs 2,600 crore (Rs 26 billion) of equity.
Meanwhile, JPVL’s board met on Saturday. The meeting planned to “consider the recommendations of the committee of directors or audit committee, aiming at reduction of debt and unlocking the shareholders’ value”, the company had told BSE in a filing on Friday. TAQA is understood to have formed a consortium of financial sponsors to conclude this transaction. The group included Canadian pension fund PSP Investments and IDFC Alternatives, the private equity arm of infrastructure finance company IDFC.
TAQA is likely to own 51 per cent, PSP 39 per cent and IDFC 10 per cent stake in the units. TAQA will operate the plants.
Saturday’s deal follows the Jaypee group’s sale of its Gujarat cement plants to Aditya Birla Group’s Ultratech for Rs 3,800 crore last year. Jaypee’s legal advisors for the deal included Vaish Associates and Bansi S Mehta, while EY acted as the merger and acquisition advisor.
The Abu Dhabi government and its agencies own 72.5 per cent in TAQA. The multinational is a key company in power generation, water desalination and oil and gas exploration.