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Blackstone, which announced plans to invest in Visa Power in 2011, had disbursed about $20 million to the company. But, as the power firm failed to meet certain milestones, Blackstone decided to write off its initial investment and call off the deal, said people aware of the development.
An email sent to Vikas Agarwal, managing director of Visa Power, remained unanswered till the time of going to press. While contacted, a Blackstone spokesperson said: "As a policy, we do not comment on market speculations."
Visa Power, part of the Rs 5,000-crore Visa Group, had inked a memorandum of understanding with the Chhattisgarh government in 2007 for setting up a 1,200-Megawatt coal-based power plant. The project, allotted 99.12 million tonnes (mt) of coal from the Fatehpur East coal block in Chhattisgarh, has an estimated project cost of Rs 6,200 crore. But, the company couldn't commission the project.
According to sources, lack of adequate resources has caused the delay. Visa Power could not fulfil certain conditions put up by Blackstone within the stipulated time. "Hence, the contract expired last year and Blackstone is not going ahead with the investment," the source added. Visa Power's other projects, under various stages of planning, include three 1,320-Mw coal-based super thermal power plants in Odisha, Madhya Pradesh and Gujarat and a 2,640-Mw power plant in Jharkhand.
According to PE investors, the possible break-up of Blackstone and Visa Power is just the tip of the iceberg. "In the current scenario, where any power project is yet to take off, especially coal-based projects, we are likely to see more similar incidents in 2013," said a PE fund manager with exposure into power companies. "None of the PE investors want to put money in a sector which sees uncertainty," he added, requesting anonymity.
Lack of clarity in coal supply has forced major power companies in India to stall their projects. State-run Coal India Ltd's bid to raise output at home has been stymied by delays in land purchases, slow environment approvals and frequent labour unrest.
GVK Energy Ltd, backed by PE firms Actis and 3i India Infrastructure Fund, had deferred its plans to set up 1,600 Mw gas-based power plants, while 3i-backed Adani Power Ltd had decided to freeze work on three projects. GMR's 1,370-Mw Shahdol thermal power project worth Rs 7,000 crore in Madhya Pradesh was also stalled, on account of coal problems. In the last two years, PE investments in power companies have seen a decline of about 74 per cent. In 2012, PE investments in the power sector saw deals worth a mere $334 million against $1.2 billion in 2010. There were 27 deals worth $445 million in 2011, according to data from VCCEdge, a financial research firm.
Apart from Visa Power, Blackstone has exposure to power companies such as Moser Baer Projects ($300 million) and Monnet Power Co Ltd ($59 million).
