Two years after it acquired the asset, Bangalore-based infrastructure player GMR Group has divested its 50% shareholding interest in InterGen N.V. to China Huaneng Group for $1.2 billion. The deal to sell the stake, acquired in October 2008 for $1,135 million, to the largest power generation company in China is expected to close in the first half of 2011. The remaining stake in InterGen is owned by Ontario Teachers’ Pension Plan.
InterGen, a power generation company with plants in the UK, the Netherlands, Mexico, the Philippines and Australia, has a total gross operational capacity of 8,146 MW. The deal is subject to customary regulatory approvals in each of the jurisdictions where InterGen has operations as well as approval of the Government of the People’s Republic of China.
The share price of GMR Infrastructure shot up by more than 6% in the morning trade to reach Rs 46.4 per unit today before coming down to Rs 45.8 by noon, still up by nearly 5%.
“The decision to divest our 50% stake in InterGen is in line with the strategy to focus more on Indian market where GMR is already a market leader. This divestment will enable GMR Group to deploy further capital and release substantial management bandwidth to focus on its Indian Investments,” said G.M. Rao, Group Chairman, GMR Group.
The overseas company holding Intergen shares is having a debt of $1,007 million as of date and the sale would release $225 million equity that can be utilized for ongoing projects, added the statement from GMR. GMR in August this year refinanced the short term loan of $737 million by a five year facility for the InterGen deal. The refinancing was done by a combination of senior and mezzanine debt from a consortium of banks led by Axis Bank and ICICI Bank.
GMR has 14 power projects of which 3 are operational (808 MW) and 11 projects (8448 MW) are under various stages of implementation. The groups energy unit, GMR Energy, recently raised around $300 million in private equity funding led by Singapore soveriegn wealth fund Temasek, IDFC Private Equity and Ascent Capital.
The global energy and power teams of BofA Merrill Lynch and White & Case LLP are acting as financial advisers and legal counsels respectively to GMR.