Blackstone and ace investor Rakesh Jhunjhunwala-backed infrastructure firm Nagarjuna Construction has acquired 55% stake in power generation company Nelcast Energy Corporation Limited for an undisclosed amount.
An associate company of iron castings firm Nelcast Ltd, Nelcast Energy is developing a 1,320 MW thermal power project at Krishnapatnam in Andhra Pradesh. The project, which will be fed by imported coal, is estimated to cost Rs 6,822 crore.
Last September, Nelcast Ltd had said it has struck a deal to sell its minority stake in the power generation firm that will bring it additional profit to the extent of Rs 79 crore and the transaction was expected to be completed by end of third quarter (December’10). Early this month, it disclosed that it has completed the transaction that will bring it additional gain of Rs 109 crore.
Nelcast reportedly owned 29.24% stake in the power firm and if Rs 109 crore is the value of that stake, Nagarjuna Construction would have paid around Rs 205 crore for the 55% stake.
Nelcast Ltd scrip rose 11% on Tuesday while Nagarjuna Construction stock was also up 2.53% at BSE.
Nagarjuna Construction acquired the stake through a wholly owned subsidiary NCC Power Projects Ltd that is developing thermal power project with capacity of 2,640 MW in Andhra Pradesh. The company will thus have an expanded asset base on the power generation business which could become big in the future.
Blackstone had struck a deal to acquire a little below 15% stake in Nagarjuna Construction through a mix of preferential allotment of shares and equity convertible warrants. While it did pick around 9% stake for around $100 million over three years ago, its proposal to convert warrants was not approved in time and it had later dropped the plan to convert it into equity.
Blackstone had picked the shares at Rs 202.5 and was to convert the warrants at Rs 225 a piece, at the peak of the market valuations. Nagarjuna Construction scrip last traded at Rs 115.65.