IVRCL to sell equity stake in Chennai desalination plant for Rs 150 cr

The stake was sold to Dubai-based Utico

As a part of its strategic business plan to monetise its BOT and BOOT  (build, operate, own and transfer) assets,  Hyderabad-based IVRCL Limited has entered into a binding agreement on December 17 with Dubai based Utico FZC (Utico) to sell its equity stake in Chennai Water Desalination Limited (CWDL), which is a subsidiary of IVRCL.

The transaction is expected to be completed in three months subject to the approvals of Chennai Metropolitan Water Supply and Sewerage Board (CMWSSB), lenders and other applicable authorities and satisfaction of certain agreement related conditions.

According to IVRCL company secretary B Subramanyam, the 100 per cent equity valuation of CWDL arrived for this transaction is around Rs 150 crore.

CWDL is a 100 million litres per day (MLD) seawater desalination project located at Minjur in Tamil Nadu, developed based on reverse osmosis technology. The project is operational since July 2010, with a 25 years concession period under a Bulk Water Purchase Agreement signed with CMWSSB.

Utico, is a company incorporated under the UAE laws, having its registered office in UAE. It is in the business of providing utility services in the middle east and its is the largest private utility in UAE specialised in water and power utilities, sewage and industrial effluent treatment plants and district cooling systems.

CWDL recorded a turnover Rs 185 crore during 2013-14, 3.71 per cent of consolidated turnover of IVRCL for the  financial year. The networth of CWDL as on March 31,  2014 is Rs 24 crore, which is 1.17 per cent of  the consolidated networth of IVRCL.

EY acted as the exclusive M&A adviser to IVRCL for this deal.