NLC India is said to be in talks with Ind-Barath to buy its 700MW Odisha power plant; deal size estimated to be around Rs5,000-5,600 crore
NLC India Ltd (earlier known as Neyveli Lignite Corp. of India Ltd) is in talks with Hyderabad-based Ind-Barath Power Infra Ltd (IBPIL) to acquire the latter’s coal-fired power plant in Odisha, two people aware of the development said.
The state-owned power producer is keen on acquiring Ind-Barath’s 700 megawatt (2x350 MW) power plant at Jharsuguda, Odisha, known as Ind Barath Energy Utkal Ltd, they said.
“Neyveli Lignite has been keen on acquiring power assets. In August, they had issued a tender inviting independent power producers and state electricity boards to apply with thermal power assets that they would like to sell. Ind-Barath was one of the parties that took part in the process, and Neyveli has shortlisted the Odisha asset as being of interest to them,” said one of the two people cited above requesting anonymity as the talks are private.
On 23 August, NLC India put out an invite for expressions of interest from companies owning coal- and lignite-based power plants of capacity of more than 200MW for possible acquisition.
Companies willing to sell assets were given a month’s time to apply.
NLC India has an installed thermal power capacity of 3,240MW. It also has 37.5MW of wind power assets and another 10MW of solar power.
The transaction could fetch Ind-Barath around Rs5,000-5,600 crore, said the second person cited above requesting anonymity.
“They have the power purchase agreements in place; and so, that will be a boost for valuations. They can expect to get anywhere between Rs7.5-8 crore per megawatt,” he said.
Funds from the sale will help the company reduce its debt and invest on completing ongoing projects, he added.
A spokesperson for IBPIL confirmed the development. He, however, added that the talks are at an early stage.
“Things are in the examination stage only. Hence, we will be in a position to reply to your queries only when things are finalized,” said a spokesperson for NLC India in an email response.
IBPIL, founded by K. Raju, has been into the business of power generation since 1999.
Currently, the company has a portfolio of nine projects in operation and three more under development.
The group has 713MW of capacity under operation and 2,865MW of assets under development, according to the company’s website.
IBPIL’s projects are situated in the states of Andhra Pradesh, Chhattisgarh, Himachal Pradesh, Kerala, Maharashtra, Odisha and Tamil Nadu.
The projects use a variety of fuels such as coal, gas and renewable energy.
Ind-Barath has, over the years, raised several rounds of private equity and structured financing.
Currently, private equity funds own around 40% in IBPIL, according to the company’s website.
In August 2015, Macquarie Infrastructure and Real Assets invested Rs780 crore in its Ind Barath Energy Utkal unit.
The investment helped existing investors of IBPIL, 3i Capital and PTC Financial Services, exit the company.
Between 2007 and 2013, IBPIL raised almost Rs2,000 crore in private equity and structured finance through various investors such as Sequoia Capital, Goldman Sachs, Citi Venture Capital International (now known as The Rohatyn Group), 3i Group, JP Morgan and Bessemer Venture Partners.
Several other power assets are on the block, too.
Infrastructure conglomerate GMR Group has initiated discussions with SembCorp Industries Ltd of Singapore and US-based Lone Star Funds for selling a significant stake in GMR Chhattisgarh Energy Ltd (GCEL), a 100% subsidiary of GMR Energy Ltd (GEL), Mint reported in October. GCEL has two power plants with a combined capacity of 1,370MW in Raipur, Chhattisgarh, that commenced commercial operations in March.
In November, Mint reported that Jindal India Thermal Power Ltd (JITPL), a part of the B.C. Jindal group, is in talks with prospective buyers to sell its 1,200MW thermal power plant in Odisha. The plant in the state’s Angul district has so far received competing offers from SembCorp, Adani Power and JSW Energy.
Earlier in July, Jaiprakash Power Ventures Ltd sold its Bina thermal power plant to JSW Energy Ltd for around Rs2,700 crore.