Debt-heavy GMR sells 30% power stake to Malaysian utility
The deal comes as most Indian power companies are struggling with softer-than-expected demand and heavy debt brought on by years of aggressive expansion, inviting pressure from lenders to divest assets to repay loans.
Malaysian utility Tenaga Nasional, backed by sovereign wealth fund Khazanah Nasional, will buy a 30% stake in the energy unit of indebted Indian infrastructure group GMR for $300 million (nearly Rs 1,995.83 crore) in cash, the companies said on Monday.
The deal comes as most Indian power companies are struggling with softer-than-expected demand and heavy debt brought on by years of aggressive expansion, inviting pressure from lenders to divest assets to repay loans.
But the entry of a deep-pocketed foreign player like Tenaga into an economy looking to provide power to its 1.3 billion people, widens the pool of potential buyers for other Indian power companies also looking to sell stakes while expanding operations.
"India has a large and supply-constrained power market with demand spurred by economic growth and (Tenaga) will be able to capture the long-term growth of the Indian electricity market," Tenaga said in a statement.
GMR, known for the New Delhi airport it helped develop, said it will use the proceeds from the deal to cut debt. Its net debt was Rs 410 billion ($6.15 billion) as of last year.
GMR Energy, whose investors include Singapore-based Temasek Holdings and a consortium led by India's IDFC Bank, has an operating capacity of around 2,300 megawatts (MW) and a pipeline of around 2,330 MW more projects, mainly coal and gas-fired but also hydro and solar energy.
Tenaga said the partnership with GMR will come with "significant opportunities to further develop renewable energy assets, in particular, solar", and is in-line with its five-year plan to secure new generation capacity internationally.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
Power of Compounding: How soon will monthly SIP of Rs 6,000, Rs 8,000, and Rs 10,000 reach Rs 5 crore corpus target?
SBI Guaranteed Return Scheme: Know how much maturity amount you will get on Rs 2 lakh, 2.5 lakh, 3 lakh, 3.5 lakh and Rs 4 lakh investments under Amrit Vrishti FD scheme
SBI Senior Citizen FD Rate: Here's what State Bank of India giving on 1-year, 3-year, 5-year fixed deposits currently
SBI Senior Citizen Latest FD Rates: What senior citizens can get on Rs 7 lakh, Rs 14 lakh, and Rs 21 lakh investments in Amrit Vrishti, 1-, 3-, and 5-year fixed deposits
02:13 PM IST