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JSW Energy inks $400 mn deal to buy Jaypee power plant

18 July, 2016

Billionaire Sajjan Jindal-led JSW Energy Ltd has agreed to acquire a 500-megawatt thermal power plant from Jaiprakash Power Ventures Ltd for Rs 2,700 crore ($400 million) including debt, the two companies said on Monday.

The cash deal for the plant at Bina in Madhya Pradesh will increase JSW Energy’s power generation capacity to 6,031 MW, it said in a stock-exchange filing.

The two companies had last year signed a preliminary pact for the power plant when JSW Energy had also agreed to acquire two hydroelectric power plants from Jaiprakash Power for as much as Rs 9,275 crore. That deal helped JSW Energy to enter the hydroelectric power segment.

JSW Energy’s expansion through acquisitions is part of its plan to increase its power generation capacity to 10,000 MW by 2025. The company had followed the hydropower deal with the proposed acquisition in May this year of a 1,000-megawatt coal-fired power plant in Chhattisgarh from Jindal Steel and Power Ltd, a company controlled by Sajjan Jindal’s brother Naveen, for up to Rs 6,500 crore ($975 million) including debt.

Meanwhile, Jaiprakash Power said the latest deal will help it cut debt and reduce its interest costs. The utility is part of Noida-based Jaiprakash Associates Ltd, the flagship of Jaypee Group, which has been selling assets to cut debt and stave off creditors seeking to take over the debt-laden infrastructure company.

Jaiprakash Associates is one of several infrastructure developers in the country that went on a rapid debt-fueled expansion over the past few years but are now struggling to repay loans. The builder of the expressway that connects the national capital region to Agra and India’s only Formula One track had total debt of about Rs 58,250 crore as of 31 March.

Earlier this month, Jaiprakash Associates managed to salvage a deal to sell nearly two-thirds of its cement business to UltraTech Cement Ltd for Rs 16,189 crore including debt.

JSW Energy said the deal for the Bina power plant is subject to regulatory approvals and that it is likely to be completed by the end of May 2017.

The Bina power plant posted revenue of Rs 895.5 crore for 2015-16, down from Rs 1,232.51 crore the year before. JSW Energy’s net sales for the year through March 2016 rose to Rs 9,810 crore from Rs 9,236 crore. Net profit increased to Rs 1,395.51 crore from Rs 1,349.51 crore.

Separately, JSW Energy also said it plans to buy a coal mining company in Swaziland for up to $1.5 million. Minerals and Energy Swaziland (Pty) Ltd has the prospecting rights over a coal-bearing area of 8,000 hectares in the African country. The deal is aimed at securing JSW Energy’s coal import requirements.

This transaction is likely to be completed by the end of September, it said.

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JSW Energy inks $400 mn deal to buy Jaypee power plant

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