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DLF sells part of wind power asset to VC-backed Bharat Light & Power for $90M

This is first leg of the deal which would be followed by sale of the remaining asset to the same firm founded by Tejpreet Singh Chopra, former chief of GE India.

DLF Ltd has struck a deal to sell a part of its wind power asset to Bharat Light & Power Pvt Ltd for Rs 282.3 crore ($53 million) in cash as it continues its strategy to exit non-core businesses to cut debts. The total deal value also includes a debt component of a little over Rs 200 crore, sources said.

Although proceeds from the sale would not bring in a significant sum, given the firm’s multi-billion-dollar debt pile, it means the firm is sticking to its promise of divesting units which are not related to its real estate business.

The property developer, along with its wholly owned arm DLF Home Developers Ltd, has 227 MW capacity wind turbines in four states.

In a disclosure on Thursday, the firm said it had agreed to sell 150 MW capacity wind turbines located in Kutch (Gujarat) to BLP Vayu (Project 1) Pvt Ltd, a subsidiary of Bharat Light & Power, for a lump sum consideration of Rs 282.3 crore.

A source privy to the development said the debt component associated with the deal would take the total transaction size to around Rs 500 crore. “DLF is looking to raise over Rs 800 crore through its entire wind asset monetisation programme,” he added.

Apart from the 150 MW asset, DLF has another 77 MW unit from which it is looking to raise another Rs 300-350 crore. Besides Gujarat, it has wind turbine projects in Rajasthan, Tamil Nadu and Karnataka.

Sources indicate that these assets will be also lapped up by Bharat Light & Power.

When contacted, a DLF spokesperson did not comment on the debt component of the transaction but said, “We are in an advance stage of negotiation for the rest of the assets and a deal is expected to be announced shortly.”

DLF was earlier in talks with private equity investors to hive off the wind energy arm. It has been trying to sell this asset for over three years and initially was expecting to raise close to Rs 1,100 crore from its sale. But it had not fructified due to high asking price.

DLF had invested Rs 1,500 crore in its wind power subsidiary.

Delhi-based Bharat Light and Power focuses on on-grid and off-grid clean energy projects which use wind, solar, bio mass, hydro and gas as sources to generate power. The firm was founded by former chief of GE India, Tejpreet Singh Chopra, who was the country head for the diversified multinational for a little over two years after taking the baton from Scott Bayman in June 2007.

His departure coincided with a wider organisational restructuring when GE made the India head more independent under its ‘one GE’ approach. Previously, different business unit heads under GE in India reported to their global vertical chiefs and the country head was more of an administrative chief for local operations.

Chopra started Bharat Light & Power in 2010. As first reported by VCCircle, the firm had raised Series A round from early-stage investors Draper Fisher Jurvetson (DFJ) and VenturEast in December 2011.

The firm reportedly raised another round of funds from Ascent Capital besides existing investors DFJ and VenturEast.

For DLF, this is the third cash-generating deal in the last six months. Three months ago, it completed the sale of a large plot of land in Mumbai at an enterprise value of over Rs 2,700 crore and last month, the company said it was selling Silverlink Resorts Ltd, the holding company for the luxury hospitality group Aman Resorts, to its founder and chairman Adrian Zecha, at an enterprise value of $300 million to reduce its debt-heavy balance sheet.

DLF had net debt of Rs 21,220 crore as on Nov 14, 2012, and aims to reduce it to Rs 18,500 crore by the end of the current financial year.

In the past one month, a slew of brokerages including Macquarie, Goldman Sachs, IIFL and Enam have given a buy call on DLF.

After this final key asset monetisation being check-boxed, DLF is now looking at its promoters for reducing their shareholding in the company through an institutional placement programme.

Sources indicate that DLF has not hired any banker yet but it is the next thing on its cards in this quarter.

(Edited by Sanghamitra Mandal)

Bharat Light and Power Pvt. Ltd. is engaged in producing clean energy generation. It generates clean energy through renewable sources namely wind, solar, bio mass and hydro. The firm also offers pre-development and post commissioning services to wind farm developers, operators, owners, investors and lenders, including plant monitoring for analysis. The company was incorporated in 2010 and is based in Gurgaon, Haryana. Bharat Light and Power Pvt. Ltd. operates as a subsidiary of Bharat Light and Power Group Pvt. Ltd.