India Power Corporation to acquire Meenakshi Energy's 89% net worth

IPC will be buying the 89% stake held by France-based Engie

With its eye on raising its power generation capacity in excess of 1,500 MW by 2017, India Power Corporation (IPC) is in the process of acquiring the entire stake held by France-based Engie in Meenakshi Energy.

The acquisition, which is subject to necessary regulatory and IPC's shareholders' approval, will turn Meenakshi Energy into a subsidiary of the former. The transfer of shares will be funded from IPC's own internal accruals as well as external debt in case it is required.

"After requisite determination of all the liabilities, the value of the deal will be finalised," chairman of IPC, Hemant Kanoria told mediapersons here.

The deal will imply takeover of 89 per cent of the thermal power plant's net worth at Rs. 1,426 crore. The total net worth is valued at Rs. 1,600 crore.

However, IPC, which was eyeing acquisitions to increase its generation capacity, will also have to bear the burden of Rs. 3,000 crore debt of the Indian independent power producer.

Engie holds a 89.11 per cent stake in Meenkashi Energy which had a turnover of Rs. 726 crore for the fiscal year ended March 31, 2015.

"This is the perfect time to go for acquisitions and going forward, there will be opportunity for us from this deal", he said.

The plant under the process of acquisition has a present power generation capacity of 300 MW which it supplies to the Andhra Pradesh government under a power purchase agreement while another 700 MW plant is in the process of being commisioned.

"It will become operational by the end of 2017 while another 450 MW thermal project in Haldia in West Bengal is also under construction", he said.

Located in the coastal area of Nellore in Andhra Pradesh, the thermal plant of Meenakshi Energy has a coal linkage with Coal India while it is also fed by imports.

Kanoria said Engie, which is listed on the Paris and Brussels bourses, is selling its stakes in thermal projects globally as part of its commitment to reduce carbon footprint.

IPC presently has a wind energy capacity of 95.2 MW spread across Rajasthan, Gujarat and Karnataka, a 12 MW fired thermal plant in Dishergarh in West Bengal and a small 2 MW grid connected solar plant in the same state.

However, completion of the Meenakshi Energy deal, which is likely to happen in the first quarter of the upcoming fiscal year, will add a total energy capacity by 1,000 MW for the company while the Haldia plant, poised to be completed by the end of 2016 will enhance its capacity by another 450 MW.