MUMBAI : Mumbai: Tata Power Co. Ltd Tuesday said it will exit a South African wind power joint venture by selling its entire stake to a local partner for $106 million. The deal is likely to be completed in the third quarter of this financial year.

Cennergi (Pty) Ltd, which owns two wind power farms totalling nearly 230MW, is an equal joint venture between Exxaro Resources Ltd, a leading South African coal producer, and Khopoli Investments Ltd, a subsidiary of Tata Power. After the transaction, Exxaro will own 100% of Cennergi.

“The decision to monetize this South African asset is in alignment with our stated strategy to deleverage the balance sheet by divesting sub-optimal size international assets," Praveer Sinha, Tata Power’s chief executive officer and managing director said in a statement.

The share purchase agreement with Exxaro Resources was executed for ZAR1,550 million ($106 million), subject to normal working capital and other adjustments, the statement added.

Cennergi owns the Amakhala Emoyeni wind farm with a generation capacity of 134.4 MW and 95% shareholding. It also owns the Tsitsikamma Community wind farm comprising 95.3 MW and a 75% shareholding. Each project has a 20-year power purchase agreement with the state power utility Eskom.

“The proceeds from such sale would be re-invested in emerging areas where there is a huge growth opportunity. The company will focus on renewable power, power distribution and service-led businesses in India which will bring in greater value and help us align with the emerging consumer needs", Sinha said in the statement.

ABSA Bank was the sole advisor to Khopoli for the transaction.

“The collaboration between Exxaro and Tata Power over the past seven years to develop these projects to their current status has been commendable and an outstanding success in South Africa’s implementation of its energy strategy. As a South African-based company, Exxaro is pleased with this opportunity to consolidate its interest in this renewable energy asset at a time in South Africa where we need energy security as we respond to increasing negative sentiment towards coal-based electricity generation," said Mxolisi Mgojo, CEO of Exxaro Resources.