As a precursor to mobilising around Rs 3,000 crore to Rs 4,000 crore through qualified institutional placement (QIP), Jaiprakash Power Venture Ltd, the wholly owned subsidiary of Jaiprakash Associates Ltd, is set to merge with Jaiprakash Hydro Power Ltd, a company listed on the Indian bourses.
Sources in the group said the proposed move is aimed at lhelping JPVL raise funds though equity routes. They added investment bankers have been appointed for the valuation. “JPVL is expected to be valued at around Rs 12,000 to Rs 14,000 crore and the merged entity will be over Rs 16,000 crore,” sources said.
Post merger, the company is planning to do a private placement by divesting 15-20 per cent stake for Rs 3,000 – 4,000 crore, sources said. Once listed on the stock exchange, it would facilitate the transaction, sources said. In the current scenario, foreign investors prefer to invest in a listed entity as it gives them an exit route, said an investment banker.
The board of Jaiprakash Associates and JHPL had appointed a committee of directors to evaluate the merger. The company board is meeting on July 3, to take a final decision to this effect.
JVPL is setting up over half a dozen thermal and hydro power plants with a combined capacity of around 8,000 Mw in various states. The wholly owned subsidiary of Jaiprakash Associates had originally planned to mop around Rs 4,000 crore through an initial public offer (IPO) in 2008, but due to poor market conditions, it did not enter the capital market. In addition, it has a 400 Mw hydro power plant in Uttarakhand.
Currently, Jaiprakash Associates owns 63 per cent stake in JHPL. Post merger, its stake is expected to go beyond 80 per cent (depending upon the valuation). JHPL, which generates 300 Mw power in Himachal Pradesh, has a market capitalization of Rs 4,250 crore.
When spoken to, Manoj Gaur, executive chairman of Jaiprakash Associates, said: “We will discuss and decide what is in the best interest of the company and its shareholders.”
In an announcement to the stock exchanges, JHPL said a meeting of the board of directors would be held on July 3 to consider the amalgamation of companies having synergy of business with that of the company for enhancing the stakeholders’ value. The board would also evaluate fund raising options through various routes for current and potential projects after amalgamation.