Resurgent Power Ventures, a private equity firm owned by Tata Power and ICICI Venture, has won the bid to acquire a 75.01% stake in Prayagraj Power Generation Co. Ltd (PPGCL), according to an announcement on Wednesday.
JSW Energy was also, reportedly, in the race to acquire Prayagraj Power, which operates a 1,980 MW coal-fired electricity generation project in Allahabad, Uttar Pradesh. Financial terms of the deal were not disclosed.
“The lenders of Prayagraj Power Generation Company Limited (PPGCL), a 3X660MW coal-based power project based in UP have issued a Letter of Intent to Resurgent Power Ventures Pte. Ltd., (Resurgent Power) for acquisition of 75.01% stake in PPGCL,” Tata Power said in a BSE filing.
Prayagraj’s project in Allahabad was set up by Jaypee Group and fully commissioned in May 2017. The original project cost was estimated at Rs.10,780 crore. However, the project got delayed by 33 months and the revised project cost stood at Rs. 15,537 crore on account of delay in land transfer, increase in foreign exchange variation and interest rates.
The lenders took controlling stake in Prayagraj after invoking the RBI debt restructuring norms, and currently hold 89.47 per cent in the company. The remaining stake is held by earlier promoter Jaiprakash Associates.
PPGCL has outstanding capex liabilities of Rs.1,023 crore as on March 31, 2017. The company clocked revenue of Rs. 58 crore in FY 16 on account of only one unit being operational for one month. The revenue increased to Rs. 1,692 crore in FY 17 on commissioning of unit-II in September 2016.
“After our due diligence, we found that Prayagraj Power fits in our overall scheme of growth. It has all approvals and clearances in place along with long-term PPA and fuel supply agreement. It will be a value-adding asset in Resurgent Power’s portfolio,” Praveer Sinha, CEO & MD, Tata Power said.
Headquartered in Singapore, Resurgent Power is 26 per cent owned by by Tata Power through its wholly owned Singapore based subsidiary. The balance 74 per cent in the private equity firm is held by ICICI Bank and international investors including Canadian pension fund CDPQ, Kuwait Investment Authority and State General Reserve Fund of Oman.