x Abu Dhabi, UAEFriday 28 July 2017

Taqa-led consortium to buy two power plants in India for $616m

Taqa had agreed to acquire the Baspa Stage II and Karcham Wangtoo hydroelectric plants from Jaiprakash Power Ventures, a subsidiary of Jaiprakash Associates.

Taqa in January last year an interest in Himachal Sorang Power Limited, the developer of a 100MW hydroelectric plant, above, in Himachal Pradesh. Courtesy Taqa
Taqa in January last year an interest in Himachal Sorang Power Limited, the developer of a 100MW hydroelectric plant, above, in Himachal Pradesh. Courtesy Taqa

Abu Dhabi National Energy Company, known as Taqa, has made further strides into India with the acquisition of two hydroelectric plants in the northern state of Himachal Pradesh, to go alongside a similar facility it acquired there last year.

Taqa said yesterday that it had agreed to acquire the Baspa Stage II and Karcham Wangtoo hydroelectric plants from Jaiprakash Power Ventures, a subsidiary of Jaiprakash Associates, for about 38.2 billion rupees (Dh 2.26bn).

The deal has been expected for several months, as Jaiprakash Associates has sought to slash its debt burden via asset disposals.

Taqa said yesterday that the acquisition of the two plants will be made via a consortium consisting of Taqa (with a 51 per cent stake), an unnamed entity that is one of Canada’s largest institutional investors (at 39 per cent) and an Indian private equity fund, IDFC Alternatives’ India Infrastructure Fund II (with 10 per cent).

The unnamed 39 per cent stakeholder is reported to be Canada’s Public Sector Pension Investment Board.

In addition to the purchase price, the consortium will also acquire the plants’ non-recourse project debt.

A Taqa spokesman declined to disclose exactly how much this debt amounted to, but said that the combined enterprise value of the two assets was about 100bn rupees.

Under the terms of the deal, which is still subject to regulatory and third party approvals, Taqa will assume management control of both hydro plants.

A Taqa statement said the deal was expected to be completed later this year.

The Baspa Stage II and Karcham Wangtoo plants have a combined power generation capacity of 1,391 megawatts (MW), according to Taqa.

The plants, located two kilometres apart, are located in Kinnaur district and share support facilities. The plants convert natural water flow to electricity, eliminating the need for a reservoir.

In January of last year, Taqa said it was purchasing an interest in Himachal Sorang Power Limited (HSPL), the developer of a 100MW hydroelectric plant in the same state, Himachal Pradesh.

The plant is scheduled to become operational this year, a Taqa spokesman said.

The HSPL acquisition was made by Taqa Jyoti Energy Ventures, a joint venture with the Indian power infrastructure company Jyoti Structures. The two companies signed an agreement in 2011 to explore investment opportunities in the power sector.

Taqa also operates a 250MW lignite power station in the Neyveli region of Tamil Nadu.

The company’s gross operational power generation capacity in India will reach 1,741MW once the HSPL plant comes online, the company said.

Jaiprakash Associates is one of several Indian conglomerates shedding assets to cut debt burdens that were accumulated to fund acquisitions during the country’s recent rapid expansion. These debt burdens have come back to haunt several conglomerates as economic conditions in the country have faltered.

Jaiprakash Associates set itself a target of cutting its net debt by US$2.4bn during its current financial year, due to end on March 31. Its subsidiary Jaiprakash Cement sold off a 51 per cent stake in a cement plant in Gujarat for 38bn rupees in September to Aditya Birla.

The conglomerate GVK said it planned to sell a stake in its airports business, which includes the main airports in Bangalore and Mumbai, during the first half of this year as a means of cutting debt.

Taqa’s shares closed down 4.7 per cent yesterday at Dh1.41.

jeverington@thenational.ae

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