ICICI Venture-Tata's PE fund inks $830 mn deal for Jaypee's Prayagraj project
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A private equity venture set up by Tata Power Co. Ltd and ICICI Group has signed a pact to acquire a majority stake in Prayagraj Power Generation Co. Ltd, which operates a 1,980 megawatt coal-fired electricity generation project in Uttar Pradesh.

Renascent Power Ventures Pvt. Ltd, a wholly owned subsidiary of Resurgent Power Ventures Pte. Ltd, signed the share purchase agreement with a group of lenders led by State Bank of India to acquire a 75.01% stake in Prayagraj Power, according to a press statement.

Singapore-based Resurgent Power was created in 2016 to invest in power projects. Tata Power owns 26% of Resurgent. The balance 74% is held by ICICI Venture, the private equity arm of ICICI Bank, and other investors including Canadian pension fund CDPQ, Kuwait Investment Authority and State General Reserve Fund of Oman.

The total payout to the lenders, including payment for one-time settlement of outstanding debt and value for equity shares and acquired preference shares, is about Rs 6,000 crore ($830 million), according to a stock-exchange filing by Tata Power.

The agreement comes two-and-a-half months after lenders to Prayagraj Power issued in August a Letter of Intent to Resurgent Power to acquire a 75.01% stake. 

Praveer Sinha, CEO and MD and Tata Power, said: “The JV (Resurgent) has been evaluating various assets that meets its investment objective and Prayagraj fits into that. Resurgent looks forward to maximizing its potential using the expertise of all the partners.”

Tata Power said the transaction is the result of stressed asset resolution process initiated by the lenders through a competitive bidding process. The deal is subject to customary approvals from regulatory authorities and is likely to be closed over the next three months.

The Prayagraj project, in Uttar Pradesh's Allahabad district, was set up by Jaypee Group and fully commissioned in May 2017. The total cost of the project was Rs 15,537 crore, Jaiprakash Power Ventures said in its 2016-17 annual report. This comprised an equity contribution of Rs 4,543.50 crore and debt of Rs 10,993.50 crore.

SBI Capital Trustee, on behalf of the lenders, controlled an 89.5% stake in Prayagraj Power, according to a recent report by credit rating firm ICRA.

The company’s revenue was Rs 2,073 crore for the year through March 2018, up from Rs 1,764 crore in the previous financial year and Rs 96 crore for 2015-16.

The Prayagraj project is one of several stressed power assets on the block, as banks increase pressure on the project developers to repay their loans. Jaypee Group, in fact, is among the most-stressed power project developers.

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