India Power Corp to buy 89% stake in Meenakshi Energy from French firm Engie

Power generation company India Power Corporation Ltd (formerly known as DPSC Ltd) has agreed to acquire 89 per cent equity stake held by France-based Engie Global Developments BV in Hyderabad-based Meenakshi Energy and Infrastructure Holdings Pvt Ltd, according to a stock market disclosure.

Following the acquisition, Meenakshi Energy would become a subsidiary of IPC. The acquisition will be funded from IPC's own internal accruals as well as external debt in case it is required.

Financial details of the deal, however, have not been determined yet. “After requisite determination of all the liabilities, the value of the deal will be finalised," IPC chairman Hemant Kanoria said.

"This is the perfect time to go for acquisitions and going forward, there will be opportunity for us from this deal,” Kanoria said.

Meenakshi Energy's assets comprise a 300 MW thermal power plant in Andhra Pradesh's Nellore district, and another 700 MW project, which is under construction and is expected to be completed by the end of 2017.

The 300 MW unit has a power purchase agreement with the Andhra Pradesh government. It runs on a mix of imported and local coal. The 700 MW plant under construction has yet to tie up for coal or power.

Engie, which is listed on the Paris and Brussels bourses, holds a 89.11 per cent stake in Meenakshi Energy which had a turnover of Rs 726 crore for the fiscal year ended March 31, 2015. The company is selling its stakes in thermal projects globally as part of its commitment to reduce carbon footprint.

The deal is expected to be completed in the first quarter of the upcoming fiscal year. The acquisition will add a total energy capacity by 1,000 MW for the company while the Haldia plant, poised to be completed by the end of 2016, will enhance its capacity by another 450 MW.

The company has been eyeing acquisitions to increase its generation capacity to over 1,500 MW by 2017. However, the company will also have to bear the burden of Rs 3,000 crore debt of the Indian independent power producer.

IPC presently has a wind energy capacity of 95.2 MW spread across Rajasthan, Gujarat and Karnataka, a 12 MW fired thermal plant in Dishergarh in West Bengal and a small 2 MW grid connected solar plant in the same state.

Khaitan & Co advised IPC on this transaction.  

IPC, which is owned by Kanoria, also operates and owns a distribution licence under the brand of DPSC Ltd and trades as DPSC on National Stock Exchange.

For the financial year 2015, Meenakshi Energy clocked a revenue of Rs 726 crore.

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