The companies did not disclose the valuation for the asset, but people privy to the development said the power asset is valued at Rs 5,200 crore.
“We wish to inform you that JSW Energy has entered into exclusive discussions with GMR Energy for potential acquisition of its subsidiary, GMR Kamalanga Energy," JSW said in its statement to the BSE. The GMR subsidiary operates a 1,050 megawatt (Mw) power plant in Odisha. “Both parties intend to conclude these discussions in an expeditious manner,” the statement said.
If concluded, JSW Energy will make a power acquisition after four years. In 2015, JSW Energy bought two hydro power assets from Jaiprakash Power Ventures for Rs 9,700 crore. In an interview with Business Standard last month, Prashant Jain, joint managing director and chief executive officer for JSW Energy, had said they would look at 10 gigawatt (Gw) capacity in the next three-five years from the current 4.5 Gw, through a mix of organic and inorganic growth. Post the sale of the Odisha plant, GMR Energy will operate a 600-Mw thermal power plant in Warora, two gas-based projects (Vemagiri and Kakinada), and one solar power plant in Gujarat.
According to a CARE ratings note on GMR Kamalanga Energy, the final project cost is estimated at Rs 6,519 crore. The company has three power purchase agreements (PPAs) with Grid Corporation of Odisha (GRIDCo), Haryana Utilities, and Bihar state utility.
As on March 31, 2019, GMR Energy held 87.42 per cent stake in GKEL, while 10.21 per cent was held by India Infrastructure Fund (IIF), a fund managed by IDFC Project Equity Company and 2.37 per cent stake by IDFC, according to CARE Ratings. For June 2019, the power plant was operating a 76 per cent utilisation level.
Conclusion of the deal will help GMR Infrastructure ease its debt pressure. The group has been on an asset monetisation spree for the past few years and looks to move to an asset light strategy. In August, GMR entered into a definitive share-purchase agreement with Adani Power for the sale of the entire stake 47.62 per cent in GMR Chhattisgarh Energy. The group’s planned divestment of non-core assets includes highways, coal mines, and special investment region assets. GMR is also in the process to demerge its airport business into a separate entity.