Lanco in talks with 2 firms to part sell power biz

Lanco Infratech is known to be in talks with international energy majors like AES of United States and Gaz de France to sell a part of its power business. The company had recently said it planned to sell a minority stake in its power business and raise $600-$750 million (Rs 2,940- Rs 3,675 crore).

“We have gone on record about the fact that we retained Macquarie to help raise equity for Lanco’s power business. This involves talking to various investors interested in the Indian power sector over a considerable period of time, which may include the names mentioned,” Sharad Jhingan, chief operating officer, Lanco Infratech, said responding to an e-mail query. AES and Gaz de France did not respond to queries.

Texas-based electricity major AES was an early entrant into the Indian power sector, stepping into the industry in 1992. The company has 49 per cent stake in Orissa Power Generation Corporation's 490 megawatt power plant. French state government-owned energy major Gaz de France has 10 per cent stake in Petronet LNG.

Lanco, which had earlier tried to secure private equity investors for its stake sale, plans to use the equity for its power plants that are being developed. It has about 4,858 megawatts of capacity under construction, while eight power projects are under various stages of development. The company would have to spin off the power business into a separate company before it ropes in partners.

The company’s capacity amounts to 4,367 megawatts — 1,334 megawatts is gas-based, 3,000 megawatts is through coal-fired power plants and 33 megawatts of wind and hydro capacity. The company also has interests in engineering, procurement and construction business, roads, solar equipment and coal production. As on December 31, its net debt stood at Rs 31,755 crore.

If the deal to induct a new partner goes through, Lanco would be the third power company to have rope in investors into its power business. While GMR and GVK inducted financial investors into the companies, Lanco's suitors are from the energy business. In April 2010, Singapore's Temasek invested $200 million (Rs 980 crore) into GMR's power business, while IDFC Private Equity invested $100 million (Rs 490 crore) later that year.

GVK had sold stake in its power business to three private equity investors. 3i India Infrastructure Fund invested Rs 800 crore in the company in November 2010, while Actis and Singapore's GIC invested a total of Rs 698 crore in the company a month later.