GMR Energy aims to raise Rs 2,600 cr from stake sale

Infrastructure giant GMR group plans to offload 5-10 per cent equity in its energy business to raise Rs 2,600 crore to fund the completion of its power plant projects.

GMR Energy, the power generation subsidiary, has already initiated talks with a slew of investors for private placement of the equity. The decision to offload the stake comes after the company reportedly deferred its earlier fund raising plan of offering shares to the public after the stock market slump.

“GMR Energy has already earmarked Rs 13,000 crore worth investments for building about 3,300 mw power generation capacity in the country. About 80 per cent of the investment will be funded via debt while the rest will come through private placement of 5-10 per cent equity,” highly placed sources said.

HIGH POWER

The GMR group arm has initiated talks with a slew of investors for private placement of equity

It plans to raise Rs 2,600 crore to complete its proposed power plants

GMR Energy has earmarked Rs 13,000 cr for generating about 3,300 mw power in the country

About 80 per cent of the investment will be funded via debt

The group recently acquired 50% in the Netherlands-based InterGen

GMR, which has 800 mw power capacity under construction, is building a 1,050 mw coal-fired plant each at Kamalanga, Orissa, and Chattisgarh and a 300-mw hydel project in Badrinath, Uttaranchal. Its 160 mw and 180 mw hydel projects are coming up at Talong in Arunachal Pradesh and Bajoli Holi in Himachal Pradesh, respectively. In Nepal, the company is setting up 550 mw hydel capacity. Additionally, the company had proposed to build a 1,980-mw imported coal-based power plant in Maharashtra.

The group, which recently acquired 50 per cent stake in Netherlands-based power firm InterGen, is scouting for acquisition of three more power assets abroad. Last year, the company failed in its attempt to acquire Tuas Power in Singapore. For fuel security, the company has picked up 10 per cent stake in Homeland Mining and Energy, a South African subsidiary of the Canada-based Homeland Energy Group, for $15 million. The company is now planning to increase its stake to 50 per cent, which will require a $155 million investment. It is also looking at opportunities in Indonesia and Mozambique, besides South Africa.

Since mine acquisitions are not easy to come by, the company does not want to lose any opportunity even though credit markets are tight and interest rates are high. GMR Energy may look at the refinancing option later but for now, are not averse to dilute promoter's stake. They might later come up with a public issue too but with the sluggishness in markets at the moment, the management does not deem that fit.

GMR is looking at expansion in the home markets too with huge capacity addition being planned in power generation in the 11th five year plan to the tune of 78,000 mw; the total investment is pegged at $ 100 billion in the sector by 2012. There are opportunities for the private sector participation. As the per capita consumption of power is around 1 kilo watt hour per year for India, is very low at a total capacity of 1,35,000 mw currently.