Jaypee Hydro to sell two hydro projects to TAQA for Rs 10,500 crore

Deal is one of the largest FDI investment in the Indian power sector

Jaiprakash Power Ventures (JPVL), the flagship company of the Delhi-based Rs 20,000 crore Jaiprakash Group, is likely to sell two of its hydro power projects in Himachal Pradesh to Abu Dhabi government's energy and utilities firm TAQA for Rs 10,500 crore in deal likely to be signed today.

The deal, part of the Jaiprakash Group's plan to cut its Rs 60,000 crore debt, follows months of negotiations between the two parties.

TAQA will acquire JPVL's 300 Mw Baspa II and 1,000 Mw Karcham Wangtoo projects in one of the largest foreign direct investments in the Indian power sector.

"The enterprise value of the deal is close to Rs 10,500 crore including both debt and equity. The equity portion amounts to around Rs 4,000 crore," said a person close to the development.

A meeting of the board of directors of JPVL is being convened today to "consider the recommendations of the Committee of Directors or Audit Committee aiming at reduction of debt and unlocking the shareholders' value," JPVL informed the Bombay Stock Exchange (BSE).

TAQA has formed a consortium of financial sponsors to conclude this transaction including Canadian pension fund PSP Investments and IDFC Alternatives - Private Equity arm of infrastructure finance company IDFC. However, TAQA is likely to hold the majority stake.

Post the acquisition, JPVL's total debt will drop to less than Rs 8,000 crore from the current Rs 19,000 crore. The group aims to pare debt by Rs 15,000 crore through sale of assets, Executive Chairman Manoj Gaur had said last year.

JPVL is India's largest private sector hydro-power producer with 1,700 Mw operational capacity. The deal follows Jaypee Group's sale of its Gujarat cement plants to Aditya Birla Group's Ultratech for Rs 3,800 crore last year. Jaypee's legal advisers for the deal included Vaish Associates and Bansi S Mehta while E&Y acted as the Merger & Acquisition (M&A) advisor.

TAQA is 72.5% owned by the Abu Dhabi government and its agencies. The multinational firm is a key player in power generation, water desalination and oil and gas exploration. The company has a current power generation capacity of 16,395 Mw.