New Delhi: In a sign of emerging solutions in India’s stressed power generation space, Resurgent Power Ventures Pte Ltd has inked an agreement to acquire 75.01% stake in Jaiprakash Associates Ltd’s 1980 megawatt (MW) Prayagraj Power Generation Co. Ltd from a State Bank of India-led consortium of lenders. While there has been a growing interest in the stressed assets space, given the promise of competitive valuations, not many deals have happened yet. The sale of Prayagraj Power marks the first such transaction in the space outside the insolvency framework.
Resurgent Power is backed by Tata Power Co. Ltd and ICICI Venture Funds Management Co. Ltd, with the firms partnering in 2016 to invest $850 million in power projects. The platform has commitments from Canada’s Caisse de dépôt et placement du Québec (CDPQ), Kuwait Investment Authority and Oman’s State General Reserve Fund. While Tata Power International Pte. Ltd (TPIPL) owns 26% stake in Resurgent Power, the balance 74% is held by ICICI Bank and other global investors.
“Renascent Power Ventures Private Limited (Renascent Power), a wholly owned subsidiary of Resurgent Power Ventures Pte Ltd (Resurgent Power) has signed a Share Purchase Agreement (SPA) with a consortium of lenders led by State Bank of India (SBI) to acquire 75.01% stake in Prayagraj Power Generation Co. Ltd (PPGCL), which owns and operates a 1,980MW supercritical power plant in the state of Uttar Pradesh, India," Tata Power said in a late evening statement.
JSW Energy Ltd had earlier submitted a revised bid of ₹ 6,200 crore for the debt-laden Prayagraj Power, outbidding Resurgent Power by ₹ 200 crore, Mint reported on 31 August.
Resurgent Power had submitted a bid of around ₹ 6,000 crore and offered 14% equity stake to the lenders in Prayagraj after the acquisition. It had also agreed to settle the tax dues.
As on 31 October 2017, Prayagraj’s total debt stood at ₹ 11,086 crore.
The 3x660 megawatt (MW) supercritical coal-based power project was named by the Reserve Bank of India in its 12 February circular directing banks to resolve the account by 27 August. The proposed transaction comes in the backdrop of the Supreme Court granting interim relief to stressed power firms, directing lenders to maintain a status quo on the Reserve Bank of India’s (RBI’s) circular to banks directing them to resolve these cases within 180 days.
“This transaction is the result of stressed asset resolution process initiated by the lenders through a competitive bidding process," the statement added.
This comes in the backdrop of the Supreme Court in August clearing the decks for insolvency proceedings against Jaiprakash Associates. Capacity of around 66GW in India is facing various degrees of financial stress. This includes 54.8GW of coal-based power assets, 6.83GW of gas-based assets and 4.57GW of hydropower assets.
“The SPA will be subject to customary approvals from regulatory authorities and the transaction is expected to be closed over the next few months," the statement said.
Resurgent has been scouting and bidding for multiple power projects across the country. Mint reported on 7 June that Resurgent had placed an initial bid to buy a controlling stake in Jhabua Power Ltd, a unit of Avantha Power and Infrastructure. The firm had also bid for Jaiprakash Power Ventures Ltd.
“The JV has been evaluating various assets that meets its investment objective and Prayagraj fits into that. Resurgent looks forward to maximizing its potential using the expertise of all the partners," Praveer Sinha, CEO and MD of Tata Power and director, Resurgent Power, said in the statement.