Tata Power may buy 50% stake in InterGen

Tata Power, the generating unit of India's biggest industrial group, is in talks to buy a 50 per cent stake in power utility InterGen NV, three people familiar with the discussions said.

The Mumbai-based company is negotiating to acquire the stake from GMR Infrastructure Ltd, the people said, declining to be identified because the discussions are confidential. At least four companies are competing for the stake with China Huaneng Group the front-runner, one of the people said. The sale may be announced in the next two months, the person said.

Tata Group Chairman Ratan Tata has made 66 acquisitions in two decades to build a group with sales of more than $70 billion. InterGen would add revenue from 12 power plants in the UK, Netherlands, Mexico, Australia and the Philippines.

“The Tatas don't have a problem with money and they are known to bid aggressively and can see a deal through,” said Jaisheel Garg, a Mumbai-based analyst with SMC Global Securities Ltd, who recommends investors buy Tata Power's stock.

The Bangalore-based GMR Infrastructure, bought 50 per cent of InterGen in 2008 for $1.1 billion from a fund owned by American International Group Inc. The rest of InterGen is owned by Ontario Teachers' Pension Plan.

China Huaneng, the nation's biggest electricity producer, is in advanced talks to acquire the stake for about $1.2 billion, two people with knowledge of the matter said August 17.

Arun Bhagat, spokesman, GMR Group, said the company doesn't comment on "speculative news." Tata Power said in a statement it hasn't bid for a stake in InterGen.

Tata Power has '7.5 billion ($160 million) of cash and '15.6 billion in short term investments, according to company filings.