Lanco looks to Malaysian partner to raise money

Debt-laden firm tries to sell stake in three power plants to Genting

Power generator Lanco Infratech is known to have reached out to its Malaysian partner, Genting, to buy stake in three of its power plants.

Lanco is looking for a stake buyer for the Amarkantak, Baband and Anpara plants. The move comes after Lanco was unable to sell stake of its power business to private equity players. Ever since, it has been looking to sell power projects to buyers to raise equity.

“We have been talking to many players, both Indian and international,” said a company official. An e-mail sent to Genting did not elicit any response, while Lanco did not comment on the development.

Genting, a Malaysian casino and resort owner, also has interests in power businesses, both in its home country and India. It has 35 per cent stake in Lanco’s gas-fired Kondapalli power plant. Genting also holds stake in Aban Power Company, which has a power plant in Tamil Nadu.

“Lanco is known to have approached Genting for a purchase. They have offered all the three projects. The matter is under discussion on the extent of stake to be sold,” said an official involved in the process.

The three power plants are coal-fired. The 1,200 megawatt Anpara power project is based in Uttar Pradesh and is currently generating power.

Lanco's Amarkantak project in Chhattisgarh is currently operating 600 megawatts. It has plans to set up another 1,320 megawatts at the same site. The third power plant on offer is at Baband in Orissa which is currently developing 1,320 megawatts.

Earlier, Lanco had tried several ways to raise equity from its power business. The company had been looking for investors for its highways business as well and engaged in multiple rounds of talks with private equity as well as other investors over the last six months.

Lanco's need to raise money comes from its highly leveraged balance sheet. Its net debt is around five times its equity, at Rs 33,833 crore at the end of December 2012. Around Rs 17,000 crore is meant for projects under operation, and the rest are for those under construction.

It does not help Lanco that some of its power buyers are also not paying up. The net receivables from various state electricity boards is Rs 3,525 crore.

“Based on internal assessment and various discussions had with the customers, the management is confident of recovery of receivables,” Lanco said in a press release. It posted a consolidated net loss of Rs 404 crore in the third quarter ending December 2012.