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Lanco Infra looking to raise over $3B by selling power assets

19 August, 2014

Hyderabad-based Lanco Infratech Ltd is planning to sell power assets with a capacity of 3,000 megawatt to raise as much as Rs 20,000 crore (around $3.3 billion), as part of its efforts to pare debt, according to a news report  by The Economic Times citing group chairman Madhusudhan Rao.

The company has appointed investment bankers, including ICICI Securities, Edelweiss, Macquarie and SBI Capital Markets, among others to find buyers. Also, the potential buyers have started due diligence, the paper said citing sources. Currently, the company has a power portfolio of around 17,000 megawatt. As on March 31, 2014, it had a net debt of Rs 36,022.1 crore.

Last week, it sold its 1,200 megawatt (MW) Udupi power plant in Karnataka to billionaire entrepreneur Gautam Adani-controlled Adani Power Ltd, for Rs 6,000 crore. As part of deal, Lanco Infratech will receive Rs 2,000 crore in cash and transfer debt of about Rs 4,000 crore to Adani. 

In February, it struck a deal with UK’s AIM-listed renewable energy firm Greenko to sell three hydro power assets with a combined capacity of 80 MW for an undisclosed amount, which came after a consortium of lenders led by IDBI Bank had approved a proposal in January to restructure its debt worth around Rs 7,700 crore, giving the company a two-year interest holiday.

On February 3 this year, Credit Suisse India Research wrote in its report that: “The company expects the recently approved debt restructuring, initiatives on equity infusion strategic investors and asset sales to address the group’s cash flow concerns.” 

“I believe Lanco has been in the market to sell its assets since a very long time. To me it appears like a force majeure from banks given its leveraged balance sheet. In this market, coal based power projects with domestic coal linkages should find takers as there are a lot of talks to ramp up domestic coal production,” said a stock market analyst with a Mumbai-based broking firm.

Lanco Infratech is producing power, mining coal and building roads. It operates through 16 companies and is said to be under deep financial stress. Its power business contributes around two-thirds of its revenue and is suffering on account of high fuel costs, scarcity of fuel, low capacity utilisation and sluggish execution.

(Edited by Joby Puthuparampil Johnson)


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Lanco Infra looking to raise over $3B by selling power assets

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