Mumbai: Bangalore headquartered global infrastructure company GMR is acquiring a 50-per cent stake in global power generation company InterGen NV, from AIG Highstar Capital II, L.P. and affiliates.
GMR Infrastructure Limited will jointly own InterGen with the Ontario Teachers' Pension Plan, which has been a 50 per cent owner of InterGen since 2005. Teachers is the largest single-profession pension plan in Canada with $107 billion in investments.
InterGen was formed in 1995 as a JV between Bechtel and PG&E Corporation. In 1997, Bechtel purchased all of PG&E's interest in InterGen and later that year sold a 50 per cennt interest to Shell Generating Limited. In 2005, Shell and Bechtel sold all of their combined interests in the company to Highstar and Teachers'.
InterGen is the second international transaction for GMR after Istanbul's Sabiha Gocken International Airport operations was taken over on 1 May and financial closure achieved in June 2008.
This transaction, GMR Infrastructure (Malta) Limited, is valued at $1.1 billion, and is said to be the largest ever acquisition of an energy utility company by an Indian company. The transaction, subject to customary agreements and regulatory approvals, is expected to close in the third quarter of 2008.
GMR says InterGen is the most competitive acquisition at $360,000 per MW which is half the current cost of similar facility.
The acquisition of InterGen N.V will enable the GMR Group to have a global platform for growth, and access to high quality management with strong expertise of development, operation and management of assets across diverse geographies.
InterGen N.V. has power plants located across the UK, the Netherlands, Mexico, Australia and the Philippines, with total net capacity (net of auxiliary) of 12,766 MW (8,086 MW of operational capacity and 4,680 MW of asset under development). The transaction is subject to regulatory approvals in each country where InterGen has operations and is expected to close in the third quarter of 2008.
GMR expects to close the transaction in CY 2008. N M Rothschild & Sons worked as the sole exclusive financial advisor whereas White & Case LLP worked as Legal advisor to the GMR Group on this transaction.
''The acquisition of a 50 per cent equity stake in InterGen N.V. is an integral part of our global strategy to be the world's leading energy and infrastructure company," said G M Rao, group chairman, GMR Group "This acquisition will provide us a platform to expand in InterGen's existing geographies and new geographies of strategic importance to both GMR and Teachers'. Such growth will be supported by the strong management, high quality assets and a partner like Teachers', which is also a leading global infrastructure investor.
''Our core experience in the 'energy business life cycle', covers identifying opportunities, developing assets in greenfield areas, strong project management skills, financial structuring and efficient operations. We found the same expertise in InterGen, which encouraged us to go ahead with the acquisition and synergise our growth. InterGen has consistently achieved economic returns in developed markets, comparable to those in emerging markets.''
Christopher Lee, Founding partner of AIG Highstar, said, ''We have greatly enjoyed working with InterGen management and our partners at Teachers' during the period of our ownership interest in this business. We are confident that GMR will be a great new partner for InterGen as it continues to the next level of well deserved success''.
Neil Smith, CEO of InterGen N.V. added ''We are very pleased that GMR, with its significant power and infrastructure development experience, has made this strategic investment in InterGen. This is a positive step in strengthening our position as a leading owner, operator and developer of global power projects''.
GMR has interests in airports, energy, highways and urban infrastructure. It has nine power projects – three in operation and six under development, and six road projects of which two are in operation and four under development. It has recently completed the new international airport at Hyderabad is modernising the existing international airport in Newd Delhi and Istanbul, Turkey.