A private equity venture set up by Tata Power Co. Ltd and ICICI Group has won a bid 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.
Lenders to Prayagraj Power have issued a Letter of Intent to Resurgent Power Ventures Pte. Ltd for the acquisition of a 75.01% stake in the company, Tata Power said in a statement. It didn't disclose financial details of the deal.
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.
“After our due diligence, we found that Prayagraj Power fits in our overall scheme of growth. It has all approvals and clearances in place along with long-term power purchase agreements and (a) fuel supply agreement,” said Praveer Sinha, CEO and managing director at Tata Power.
The transaction is subject to customary approvals and conditions.
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 operating income stood at Rs 1,692.3 crore for the year through March 2017, up from Rs 58.4 crore in the previous financial year.
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.
In a separate development, Bloomberg reported that Adani Power is close to acquiring a 1,370 megawatt thermal power project of GMR Infrastructure Ltd in Chhattisgarh.
Earlier in the day, Mint reported that Delhi-based industrial gases producer Goyal MG Gases Pvt. Ltd has made the highest bid for a controlling stake in debt-laden Jhabua Power Ltd, a subsidiary of Avantha Power and Infrastructure Ltd.