Jaypee to sell two hydro power units to Abu Dhabi’s TAQA for Rs10,500 crore: report

01 Mar 2014


Jaiprakash Power Ventures (JPVL), the flagship company of the Delhi-based Jaiprakash Group, is reported to be signing a deal to sell two of its hydro power projects in Himachal Pradesh to a consortium led by Abu Dhabi's state-run energy firm TAQA, for around Rs10,500 crore.

TAQA will acquire JPVL's 300 MW Baspa II and 1,000 MW Karcham Wangtoo projects in one of the largest foreign direct investments in the Indian power sector, the Business Standard and The Economic Times reported.

The deal, part of the Rs20,000 crore asset-disposal plan by Jaiprakash Group to cut its Rs60,000 crore debt, follows months of negotiations between the two parties, according to The Economic Times.

The 300 MW Baspa Hydro-electric project Stage II, which is on built own and operate (BOO) basis, is an environment friendly run-of-the-river power project devoid of any rehabilitation or resettlement issue.

The project site is located on the river Baspa, a tributary of river Satluj in Kinnaur district of Himachal Pradesh.

The 1000 MW Karcham-Wangtoo hydro-electric project, also located in Himachal Pradesh, is India's largest private hydropower station in the making. Being built on BOO basis, it is envisaged as run-of-the-river project and is also being constructed on River Satluj in Kinnaur district.

"The enterprise value of the deal is close to Rs10,500 crore, including both debt and equity. The equity portion amounts to around Rs 4,000 crore," the report quoted sources close to the development as saying.

The board of directors of JPVL is being convened to "consider the recommendations of the committee of directors or audit committee aiming at reduction of debt and unlocking the shareholders' value," JPVL informed the Bombay Stock Exchange (BSE).

TAQA has formed a consortium of financial sponsors to conclude this transaction including Canadian pension fund PSP Investments and IDFC Alternatives - Private Equity arm of infrastructure finance company IDFC.

TAQA will own 51 per cent, Canada's PSP will own 39 per cent and IDFC will hold 10 per cent in the hydropower units. TAQA will operate both the units.

Post acquisition, JPVL's total debt will drop to less than Rs8,000 crore, from the current Rs19,000 crore.

Executive chairman Manoj Gaur had said last year that the group aimed at paring debt by Rs15,000 crore through sale of assets.

JPVL is India's largest private sector hydro-power producer with 1,700 MW operating capacity.

The deal follows Jaypee Group's sale of its Gujarat cement plants to Aditya Birla Group's Ultratech for Rs3,800 crore last year.

Vaish Associates and Bansi S Mehta acted as Jaypee's legal advisers for the deal while E&Y were the merger and acquisition (M&A) advisor.

TAQA, which is 72.5 per cent owned by the Abu Dhabi government and its agencies, is a key player in power generation, water desalination and oil and gas exploration. The company has a current power generation capacity of 16,395 MW.

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