Hyderabad: The infrastructure holding company formed to fund the capital requirements of GMR Group’s public works projects, GMR Infrastructure Ltd, confirmed it is acquiring a 50% stake in the Netherlands-based power producer, InterGen NV, for about $1.1 billion (Rs 4,708 crore).
GMR said it signed an agreement with AIG Highstar Capital to acquire the stake in InterGen, at $360,000 per MW. GMR expects to close the transaction during this calendar year.
Canada’s Ontario Teachers Pension Plan holds the balance 50% equity stake in InterGen, which reported $1.65 billion in revenues and an Ebitda (earnings before interest, taxes, depreciation and amortization) of $613 million for 2007.
GMR chairman Grandhi Mallikarjuna Rao says the stake will provide a platform for the group to expand into new markets (Photo by: K.Sudheer / Mint)
GMR edged out two Malaysian firms and one each from the US and the UK to win the deal in a bidding process completed in 105 days, a senior official familiar with the deal said. Reliance-Anil Dhirubhai Ambani Group, owned by billionaire Anil Ambani, pulled out from the bidding after showing early interest.
GMR Group has raised $1.1 billion through a two-year bridge loan—that will be repaid in two years—from a group of Indian banks led by Axis Bank Ltd that will pay the seller. Once the transaction is completed, GMR has various means to repay the loan, including raising money against its 50% stake, said Navin Wadhwani, director at NM Rotshschild and Sons (India) Pvt. Ltd, which advised GMR on the transaction.
“Funding was not an issue,” Madhu Terdal, GMR Group’s chief financial officer, said. “At the end of the day, price doesn’t matter, but the certainty of the financial closure has helped us to clinch the deal.”
Terdal said the group wouldn’t have found such acquisition opportunities in India and organic expansion would have taken too long.
GMR Group also has a perpetual right to buy Ontario Teachers Pension Plan’s 50% stake if it decides to sell.
InterGen has operations in five countries with an ownership interest in 12 operating power plants, totalling 8,258MW of generation capacity?with?another?4,882MW of assets under development. Its power plants are in the UK, the Netherlands, Mexico, Australia and the Philippines.
The stake would provide GMR Group a platform to expand in InterGen’s existing geographies and new markets of strategic importance, said Grandhi Mallikarjuna Rao, chairman of GMR.
Arvind Mahajan, executive director of audit and consulting firm KPMG India, said the acquisition will also expose GMR to newer fuel sources and alternative fuels.
“After losing the bid to acquire the $2 billion power assets of Singapore-based Tuas Power early this year, we had to (successfully) bid for the InterGen NV assets,” said Raaj Kumar, chief executive of GMR’s energy division.
GMR Group, which has interests in power generation and roads and airports, has around 4,400MW of power projects that include more than 800MW of operating capacity, 2,100MW of thermal capacity and 1,500MW of hydel capacity under execution.
GMR Infrastructure shares rose 3.12% to close at Rs99.15 a share on the Bombay Stock Exchange on Wednesday. The Economic Times first reported the deal on Wednesday.