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Business News/ Companies / JSW Energy in pact to acquire Monnet Power
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JSW Energy in pact to acquire Monnet Power

No deal valuation was disclosed as part of Thursday's announcement

JSW Energy has been aggressive in picking up stressed assets.Premium
JSW Energy has been aggressive in picking up stressed assets.

Mumbai: Iron producer Monnet Ispat & Energy Ltd on Thursday said it has signed an agreement with JSW Energy Ltd to sell a majority stake in its subsidiary Monnet Power Co Ltd.

In its filing to BSE, the company said it has signed “non-binding memorandum of understanding (MoU) with JSW Energy for entering into discussion to sell a majority and controlling stake of its subsidiary Monnet Power Co., which is engaged in the business of developing 1,050 MW (2 x 525) coal-fired thermal power plant located at Malibrahmani, Angul, Orissa".

Separately, JSW Energy also informed the stock exchange that it had signed an agreement for initiating a due diligence process for “the possible acquisition of a majority stake in Monnet Power".

No deal valuation was disclosed as part of Thursday’s announcement since only a non-binding MoU has been filed.

A person close to the development said the non-binding agreement will be followed by discussions and due diligence. “A potential deal is not imminent. But JSW Energy is keen on the asset," the person said, requesting anonymity.

Monnet Ispat was not immediately available for comment.

Consolidated debt for Monnet Ispat on 31 March stood at 11,075.46 crore. For 2014-15, the company reported a net loss of 856.9 crore compared with a profit of 37.04 crore in the previous year.

In March, The Times of India had reported that the Adani Group and JSW Group were both looking to acquire a majority stake in Monnet Power in a deal that could be valued at close to $500 million.

Shares of Monnet Ispat gained 1.42% to close at 35.65 per share on Thursday on the BSE, while the benchmark Sensex lost 0.41% to close at 27,573.66 points. The announcement came after market hours.

JSW Energy has been aggressive in picking up stressed assets. In November 2014, the company bought two hydro electric power projects from Jaiprakash Power Ventures Ltd for 9,700 crore. As of March 2015, JSW Energy had a debt of 8,210.57 crore. The company reported a profit of 1,350 crore in fiscal 2015.

JSW Energy is looking to capatalise on the consolidation in the power sector, said Devam Modi, analyst, Equirus Securities. “JSW is sitting on a cash pile and has made clear to the market that it has been looking for acquisitions," Modi said. “The company has shown good patience with its acquisitions in recent years."

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Published: 09 Jul 2015, 10:27 PM IST
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