NCC to sell 16% in power project to Sembcorp for $52M

NCC Ltd has agreed to sell a 16 per cent stake in Sembcorp Gayatri Power Ltd (SGPL) to Sembcorp Utilities Pte Ltd for Rs 352 crore ($52 million), as the infrastructure company continues to divest assets to cut debt.

The stake sale is part of “strategic initiatives” to sell its stake in various special purpose vehicles in which it had invested, the Hyderabad-based company said in a stock-exchange filing on Wednesday.

NCC, earlier known as Nagarjuna Construction Company, held the stake in SGPL through unit NCC Infrastructure Holdings Ltd.

SGPL was formerly known as NCC Power Projects Ltd, in which Gayatri Energy Ventures Pvt Ltd and NCC Ltd together held a 51 per cent stake. The company is developing a 1,320-megawatt coal-fired plant at Nellore district in Andhra Pradesh that is likely to be completed this year.

In 2014, Singapore’s Sembcorp, through wholly owned arm Sembcorp Utilities, agreed to pick up a 45 per cent stake in the power project developer for Rs 848 crore ($135 million then). It also had an option to buy a further 20 per cent in the project.

Singapore Stock Exchange-listed Sembcorp is an energy, water and marine group. It has about 10,600 MW of power capacity installed and under development. The project at Nellore, when completed, will double Sembcorp’s power generation capacity in the country.

For NCC, the transaction is the latest sale of an asset as it strives to reduce its debt. The company, in which private equity giant Blackstone holds a 9.9 per cent stake, in June last year that it was looking to sell its road and power assets to cut debt.

In January this year, NCC sold its 51 per cent stake in Western UP Tollway Ltd, which operates a highway project in Uttar Pradesh, to private equity firm I Squared Capital. The deal also involved Gayatri Projects Ltd and its subsidiary Gayatri Infra Ventures Ltd selling their stake to I Squared. The enterprise value of the deal was Rs 575 crore (about $85 million).

Last month, NCC sold its 38 per cent stake in Bangalore Elevated Tollway Ltd to IDFC Alternatives, the PE arm of IDFC Ltd. Soma Enterprise Ltd also sold an equal stake in the deal with an enterprise value of about Rs 750 crore.

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