Infrastructure major GMR Group has entered into a share purchase agreement to sell its 70 per cent stake in power plant GMR Energy (Singapore) Pte Ltd (GMRE) to FPM Power Holdings Ltd for S$660 million ($530 million). Out of this deal value, FPM will invest S$60 million in GMRE as the balance equity, according to a company disclosure.
This sale translates to an enterprise value of S$1.6 billion or $1.29 billion for GMRE on project completion by the end of 2013. The transaction is expected to be closed by the end of this month and will result in a profit of Rs 1,356 crore (S$307 million) for GMR, the company said on Monday.
In September 2011, the firm sold 30 per cent stake in GMRE to Petroliam Nasional Berhad, a wholly owned subsidiary of Malaysia’s Petronas, for $38.52 million.
GMR Infrastructure (Singapore) Pte Ltd owns 66.4 per cent in GMRE; 3.6 per cent is held by GMR Infrastructure Ltd and the rest 30 per cent stake is held by Petronas, who will stay invested in the project.
“The divestment is the off-shoot of the group’s well-thought-out strategy of an asset right-asset light and cash flow-based model that the group has embarked on in the recent times. This is the second such strategic move after last month’s divestment of 74 per cent stake in GMR Jadcherla road project at a premium. The cash flows will help GMR Energy to focus on our domestic energy business and accelerate ongoing projects of 5,790 MW,” said GM Rao, chairman of the GMR Group.
Macquarie Capital India and Standard Chartered Bank jointly acted as the advisor to GMR on the transaction.
GMRE is developing an 800 MW combined cycle gas turbine power plant in Jurong Island in Singapore. The project was set up by a consortium comprising Siemens and Samsung. The GMRE plant is almost 96 per cent complete and is expected to commence operations by the end of this year.
FPM Power Holdings is a Hong Kong-based investment management and holding company involved in the business of telecommunications, infrastructure, consumer food products and natural resources. The firm has an enterprise value of $10.8 billion. It is a 60:40 joint venture between First Pacific Co Ltd and Meralco Power Gen Corp, a wholly owned unit of Manila Electric Company or Meralco.
(Edited by Sanghamitra Mandal)