JP Power gains 8.7% on sale of hydro plants to R-Power

New Delhi: Jaiprakash Power Ventures Ltd, the debt-laden Indian generator, rose the most in more than two months after Reliance Power Ltd (R-Power) agreed to buy its three existing hydropower plants valued at $1.7 billion.

Unit Reliance CleanGen will take over JP Power’s hydropower plants in the country that have a combined capacity of 1,791 megawatts, according to a statement on Sunday from billionaire Anil Ambani-controlled R-Power. JP Power and its units had ₹ 24,460 crore of total debt and ₹ 620 crore of cash and equivalents as of 31 March, according to data compiled by Bloomberg.

JP Power shares jumped as much as 8.7% to ₹ 20.60 and traded at ₹ 19.80 as of 11:23am in Mumbai. The shares have gained 4.8% this year, compared with a 23% increase in the benchmark S&P BSE Sensex.

R-Power shares gained as much as 3% to ₹ 93.60 and traded at ₹ 92.80 at 11:24am. The shares were up 26% this year.

The sale will give R-Power, which currently operates 4,525MW of generation capacity, ownership of cleaner hydro-based capacities at about ₹ 5.5 crore a megawatt. The cost of setting up a new hydro project is approximately ₹ 7 crore a megawatt.

“This is great for Jaiprakash as it’ll help it cut debt,” said P. Phani Sekhar, a Mumbai-based fund manager at Angel Broking Ltd. “The hydropower plants are operational assets, and will help increase R-Power’s cash flows.”

Abu Dhabi National Energy Co. withdrew an agreement to buy two of Jaiprakash’s plants, the Indian company said in a 24 July statement, citing a change in the strategy of the Abu Dhabi company, known as Taqa. Bloomberg

R-Power has sued HT Media Ltd, publisher of Mint, in the Bombay high court over a 12 May 2010 front-page story in Mint that it disputed. HT Media is contesting the case.