GMR divests 30% in energy assets

Proceeds from deal with Malaysian firm to be used for retiring Rs 2,000-cr debt

Bengaluru-based GMR Group will disinvest 30 per cent in its 10 energy assets to a Malaysian power utility for $300 million (Rs 2,000 crore).

The management committee of GMR Infrastructure Limited (GIL) on Monday approved the primary capital investment by Tenaga Nasional Berhad (Tenaga) in GMR Energy Limited (GEL).

The Malaysian power giant would have the right to invest in other assets, including the Chhattisgarh power plant, Indonesian power assets and others at any time within the next five years. The group was awarded Ganeshpur coal block for the 1,370-megawatt (Mw) Chhattisgarh power plant in e-auction last year.

Tenaga will also appoint their executives in the senior management of GMR Energy during the development and operation stage of the projects it has picked up stakes in.

The sale proceeds would be used for retiring Rs 2,000-crore debt of GMR Energy. “This would save the company Rs 250 crore in interest cost, annually. The group currently has consolidated debt of Rs 6,375 crore,” said G B S Raju, chairman, GMR Energy. With corporate debt reduced, the group would now need to focus on operationalising their power projects, said an associate director with a Mumbai-based brokerage who did not want to be named.

In December, GMR Infrastructure raised another Rs 2,000 crore from Kuwait Investment Authority (KIA) which was the largest bilateral investment between India and the West Asian country in recent times. The Kuwaiti authority subscribed to GMR’s 60-year-long Foreign Currency Convertible Bond (FCCB) due 2075.

The group has been following an asset-light strategy and has been on a capex holiday, except for select opportunities in the airport sector, for the past few years.

In the past few years, it has divested five assets releasing Rs 3,800 crore equity and reducing liabilities by Rs 6,200 crore.

Tenaga is the largest power utility player in Malaysia with a presence across the value chain of power generation, transmission and distribution.

It has an installed capacity of 10,818 Mw and 50 per cent market share of the Malaysian grid’s generation capacity, it also has the backing of the Malaysian government. The company has experience in managing and operating power assets with several thermal power plants, large hydro plants, power distribution business and supporting O&M of independent power producers all over Southeast Asia, South Asia and Turkey.

“Through this partnership, GMR Group is bringing a world-class power developer and operator in the Indian market. Tenaga’s experience would further facilitate GEL in improving the performance of its operational assets and develop it’s under development pipeline of hydro & renewable energy assets,” the company said.

GEL manages a portfolio of coal-based, gas-based and renewable (hydro & solar) power projects, of 4,630 Mw. This portfolio would have an operating capacity of 2,300 Mw and pipeline capacity of 2,330 Mw.

G M Rao, group chairman, GMR Group, said: “India’s substantial and sustained economic growth will require collaboration from all stakeholders in the power sector. We believe our partnership with a major power sector player like Tenaga is one of the steps to implement the Prime Minister’s vision.”