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Adani Power to buy Lanco’s Udupi power plant at an enterprise value of $1B

13 August, 2014

3i-backed private power generator Adani Power has bought Lanco Infratech’s 1,200 MW thermal plant in Udupi (Karnataka) at an enterprise value pegged at a little over Rs 6,000 crore or around $1 billion, as per a company statement.

As per the deal, Lanco will get around Rs 2,000 crore while the remaining Rs 4,000 crore debt would pass on to Adani Power.

Adani Power, which recently lost the race to buy two large hydro power assets of Jaypee Group for around $2 billion to Reliance Power, now gets to sew one of the biggest M&A deals in the domestic thermal power space.

Lanco had put the asset on the block more than two years ago as part of its move to cut the huge debt pile on its books.

The plant has an agreement with the state government to expand the capacity by another 1,320 MW.

The imported coal-based thermal power plant, which supplies 90 per cent of its output to the home state and the rest to Punjab, is the first independent power project based on 100 per cent imported coal with captive jetty of 4 million tonnes per annum.

Lanco Infratech scrip ended the day at Rs 8.53 a share, down 4.8 per cent while Adani Power shares crumbled 3.7 per cent to close at Rs 52.05 a share in a flat Mumbai market on Wednesday.

Adani Power counts private equity firm 3i as a shareholder, having backed the power firm before the company went public.

Recently 3i part exited its almost seven-year-old investment in Adani Power at a loss. The firm sold a little over 2 per cent stake in the company in small lots for around Rs 325 crore ($55 million).

3i Capital had originally invested Rs 900 crore in Adani Power in October 2007 and later put in around Rs 75 crore in June 2009. This was one of the most prominent deals by a single PE firm in a power company in the country.

Its remaining 3.37 per cent stake is also marginally underwater.

(Edited by Joby Puthuparampil Johnson)


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Adani Power to buy Lanco’s Udupi power plant at an enterprise value of $1B

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