Hyderabad: City-based infrastructure firm GVK Power and Infrastructure Ltd, or GVK-PIL, is buying a controlling stake in two thermal power generation firms, a top executive said, without naming the utilities.
“We are currently in the process of acquiring controlling stake in two coal-fired power companies with a cumulative power generation capacity of 1,800MW in the domestic market,” said Issac A. George, GVK group’s chief financial officer.
Declining to identify the firms citing non-disclosure agreements with them, he said, both the coal-fired firms have assured coal supplies. “The project with 1,200MW (capacity) is in Maharashtra and the one with 600MW (capacity) is located in Chhattisgarh.”
While GVK-PIL has completed due diligence for buying a stake in the 1,200MW thermal power generation company, it is yet to complete the process for the second, George said.
The buyouts are part of the company’s strategy to have an installed capacity of at least 5,000MW in the next 24 months before its intermediate holding company for the power business raises money from the equity markets through an initial public offering, the finance executive added.
“We are looking at either acquiring a controlling stake in these power companies or buying 50% stake with management rights,” he said.
GVK-PIL is currently negotiating with three global private equity funds to divest up to 25% stake in its power business and expects to ink deals in the next six to eight weeks, George said. The firm will pay between Rs1,200 crore to Rs1,400 crore for controlling stakes at the 1,200MW project. “We are yet to arrive at valuations for the 600MW project,” he said.
The company is also scouting for attractive power assets in the global markets. “We have informally sounded some consultants to look for good power assets globally,” he said.
On the 3,300MW power generation assets put on the block recently by Singapore’s Temasek Holdings Pte Ltd, the second power generation facility it is offering to sale, George said, “These assets do not attract us. We were interested in the first project, but the valuations were high and we did not proceed.”
GVK-PIL’s shares rose 12.67% to close at Rs37.80 on the Bombay Stock Exchange, or BSE, on Wednesday, while its benchmark Sensex index rose 5.94% to close at 14,942.28 points. The shares attained a peak of Rs93.50 on 6 December on BSE. The stock is currently 60% below its 52-week high and 28.52% above the year’s low of Rs29.10.