Srei, partner buy 57% of power distributor DPSC

Srei, partner buy 57% of power distributor DPSC

Kolkata: Non-banking finance company Srei Infrastructure Finance Ltd and a partner on Friday bought a 57.18% stake in power distribution firm DPSC Ltd for Rs171.85 crore. DPSC is one of the country’s oldest power distribution firms—it supplies 125MW of power in a 620 sq. km area in an industrial belt in West Bengal and Jharkhand, and produces 42MW of power. DPSC owns 200 acres of land and has “some approvals" for setting up a 500MW power plant, according to the tender document circulated among bidders.

The stake in DPSC, for which an auction was held on Friday, is jointly held by government-owned Andrew Yule and Co. Ltd, Life Insurance Corp. of India (LIC) and United India Insurance Co. Ltd. Andrew Yule and its subsidiaries own 15.21% in DPSC, while LIC and United India own 30.61% and 11.36%, respectively.

The winning bid was made jointly with India Power Corp. Ltd (IPCL), a 50-50 joint venture between Srei and Bhaskar Silicon Pvt. Ltd, a green energy producer. They offered Rs710 per share, outbidding DPSC’s subsidiary Descon Ltd, which offered Rs705.

Kolkata-based power utility CESC Ltd was also in the fray, opting out after the ninth round, according to Andrew Yule chairman Kallol Dutta. CESC offered Rs625 a share, he said.

The IPCL-Srei combine emerged as the highest bidder after 16 rounds. DPSC’s shares jumped 12% on the National Stock Exchange to Rs682, while the bourse’s benchmark Nifty index gained 1.27% to close at 5,052.45 points.

In keeping with Indian takeover laws, the Srei-IPCL combine, which holds about 8% of DPSC already, will make an open offer for at least 20% more of the company’s shares.

Descon has pledged its 32.31% stake with JSW Energy Ltd. A Descon official, who declined to be named as he isn’t authorized to speak to the media, said his company was “very likely" to sell its stake in DPSC if the Srei-IPCL combine made an offer for its holding.