Shapoorji Pallonji to sell power project in Bangladesh, cut debt

Shapoorji Pallonji Real Estate plans to invest Rs600 crore on buying land parcels this year to build a pipeline of projects. Photo: Ramesh Pathania/Mint

Shapoorji Pallonji group, the debt-laden construction empire run by billionaire Pallonji Mistry, has put its gas-fuelled power plant in Bangladesh on the block to reduce debt, two people aware of the development said.

The group’s 225 megawatt (MW) Bhola power project in power-starved Bangladesh may be valued at around $270 million, one of the two people said, requesting anonymity. Standard Chartered has been hired to find a buyer for the Bhola power plant that is expected to be commissioned soon.

Experts said an assured power purchase agreement for 22 years with the Bangladesh Power Development Board is expected to help Shapoorji Pallonji get a better valuation for the asset.

“It’s a good project with GE machines and is nearing completion,” said the second person, also requesting anonymity.

GE Power has supplied the equipment for the project including two gas turbines, two heat recovery steam generators, a steam turbine generator, condenser and associated control systems.

In an emailed response, a spokesperson for Shapoorji Pallonji group said “the group is currently focused on completion of the project”. A Standard Chartered Bank spokesperson declined to comment.

Shapoorji Pallonji group, which is locked in a legal battle with Tata group over Cyrus Mistry’s ouster as chairman of Tata Sons Ltd, is considering several options, including selling solar power plants and road assets, besides a stake in its water-purifier business, Eureka Forbes, to reduce debt.

On 15 January, The Economic Times reported that Deutsche Bank provided $200 million in bridge financing to Shapoorji Pallonji group against its ownership of Tata Sons shares.

In November, rating agency ICRA downgraded the long-term rating of Shapoorji Pallonji and Co. Pvt. Ltd, citing “lower-than-anticipated progress achieved by the company in terms of its deleveraging plans through equity infusion and asset monetization”.

Global private equity fund Actis Llp’s renewable energy platform, Sprng Energy, in March last year acquired 194MW of Shapoorji Pallonji group’s solar assets at an enterprise value of $200 million.

The Bhola project is being developed by Shapoorji Pallonji Infrastructure Capital Co. Ltd as an independent power producer and will help meet electricity demands of 200,000 homes in Bangladesh.

Established in 1865, Shapoorji Pallonji group is present in engineering and construction, infrastructure, real estate, water, energy and financial services, and has around 69,000 employees.

Bangladesh has been trying to meet its electricity demands by wheeling power from projects in India. Dhaka plans to buy at least 2,000MW of electricity from large solar parks being set up in Gujarat and Rajasthan.

Adani Power plans to supply electricity to Bangladesh from its proposed coal-fuelled project in Jharkhand.

This article was first published on livemint.com

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.