The GMR group on Monday said it is selling 30 per cent stake in select portfolio of assets of its subsidiary GMR Energy (GEl) to Malaysia’s Tenaga Nasional Berhad for $300 million on a fully diluted basis. GMR Group Corporate Chairman Kiran Kumar Grandhi said the sale proceeds will be used to reduce corporate debt load of GEl, which is currently pegged at Rs 2,750 crore.
“Tenaga is making an investment of $300 million (approximately Rs 2,000 crore) in GMR Energy. Their investment represents 30 per cent stake in GEl comprising seven portfolio of energy assets, which indicates a valuation of $1 billion, or Rs 6,700 crore,” Grandhi said on a conference call.
GEl will manage a balanced portfolio of seven coal-, gas-based and renewable (hydro and solar) power projects with a total capacity of 4,630 MW. This portfolio would have an operating capacity of 2,300 MW and pipeline capacity of 2,330 MW, including 1,500 MW hydel power projects in Nepal.
Grandhi said all the seven assets in which the Malaysian firm is acquiring stake have power purchase agreements (PPAs) and clearances in place and some of them are generating cash flows with stable operations. Furthermore, Tenaga has the right to invest in Chhattisgarh and other assets any time in the next five years, he said, adding that synergies between both the groups will lead to a long and strong partnership benefiting both GEl and the Indian power sector.
“As of now, the entire amount will go towards reducing corporate debt. Today, the GMR group's consolidated debt is in the range of Rs 6,375 crore,” he said.
“Corporate debt for GEl is Rs 2,750 crore. With this, Rs 2,000 crore debt will retire and debt will go down to Rs 750 crore. We will save annually Rs 250 crore per annum towards interest.” Replying to a specific question, he said the company's gas-based plants in Andhra Pradesh are currently operating at 35 per cent PlF (plant load factor).
It is hoping for 50 per cent PlF in the second half of this year. Tenaga is the largest power utility player in Malaysia with integrated presence across the value chain of power generation, transmission and distribution with a total installed capacity of 10,818 MW and 50 per cent market share of Malaysian grid's generation capacity.
GMR group Chairman G M Rao said: “India’s substantial and sustained economic growth will require collaboration from all stakeholders in the power sector. The Prime Minister has set a vision of 24x7 power for all by 2022. We believe our partnership with a major power sector player like Tenaga is one of the steps to implement the Prime Minister’s vision.” According to GMR Energy Chairman G B S Raju, the collaboration “once again signifies GMR's commitment and ability to successfully execute strategic partnerships to create value for all its stakeholders.”