Hyderabad-based Malaxmi Energy Ventures merger with listed PVP Ventures has been called off. After this fall out, Malaxmi has entered into preliminary talks with Essar Power to sell its stake in the 2250 MW Navabharat Power Pvt Ltd in Orissa, said a source close to the development.
Essar Power operates five power plants with a combined capacity of 1,200 MW. Malaxmi holds a 50% stake in Navabharat Power Pvt Ltd, which is setting up a 2,250 MW coal-based power project in Dhenkanal district, Orissa. Other shareholder in this project is Nava Bharat Ventures Ltd. The project has already been allotted coal blocks and coal linkages.
Prasad V Potluri, chairman and managing director of PVP Ventures, confirmed that merger has been called off when contacted by VCCircle. Repeated calls and e-mail sent to Y. Harish Chandra Prasad, the chairman of Malaxmi, were not answered till the time of publishing this article. When contacted, Essar Power spokesperson said that it is not our
policy to comment on any speculation.
According to a recent disclosure by PVP to the exchanges, Harish Chandra Prasad has resigned from the board of directors at PVP Ventures. Both PVP and Malaxmi, which also has interests in special economic zones and agriculture, are now pursuing their independent M&A opportunities.
After the merger with Malaxmi, was announced last year, PVP's Potluri had chalked out major investments of $1 billion into the power sector. Now PVP is evaluating new acquisition targets of around $100-150 million, which will be funded through internal accruals and roping in private equity players.
Malaxmi also has a 26% holding in Simhapuri Energy Pvt Ltd, a JV with Madhucon Projects for a 540 MW power project at Krishnapatnam, Andhra Pradesh. It also has another 540 MW thermal power project in Tuticorin, Tamil Nadu, being developed with Sujana Group. All these projects were going to become a part of the PVP Malaxmi Energy
Essar Power, part of the telecom to steel conglomerate owned by the Ruias, is planning to expand its installed capacity to 6,000 MW by 2012, as per its website. It has three more coal-based power plants coming up in Gujarat, Madhya Pradesh and Jharkhand. Essar Power raised Rs 350 crore in funding from IDFC Project Equity earlier this year.