Powergen Weighing Sale Of Equity Assets In India

The UK-based power major PowerGen has appointed Goldman Sachs to weigh the possibility of selling off its equity assets in India. The move is part of PowerGen's global strategy to raise funds for meeting its investment needs.

The PowerGen Public Ltd Company official spokesperson in London, Gareth Wynn, said: "Goldman Sachs is valuing all our existing assets, including those in India, to enable PowerGen to maintain debt requirements after it acquired the US-based LG&E Energy Corp in February this year."

He said since the $3.2 billion all-cash deal had just been cleared by the US regulatory authorities, the transaction part had to be concluded by the year-end.

 

And Goldman Sachs will assess PowerGen's assets and find a buyer as well. Wynn said the assets could be in India or other parts of the world, including the UK. However, he did not rule out the possibility of PowerGen pulling out of India if recommended by Goldman Sachs.

The restructuring exercise has raised doubts over the future of PowerGen's Rs 3,500 crore investment plan for India. It has four ongoing projects in the country which are in various stages of implementation, and it was supposed to strike the fifth deal last year.

It is learned that one of the criteria for deciding on the new owner of PowerGen International will be whether it will honour PowerGen's commitments. One of PowerGen partners in India also told Business Standard: "We are given to understand that the new owner of PowerGen International will keep the commitments already made in India."

Wynn asserted that PowerGen had the funds to buy out the US company and asset sale was not needed for that. He said the amount to be raised would be announced during restructuring.

Worldwide, PowerGen is involved in 11 power projects in Germany, Hungary, Portugal, Australia, Indonesia, Thailand and South Korea, besides India. With the exception of Germany, PowerGen is responsible for operating and maintaining all the plants.

In India, apart from the majority stake in the Torrent project, PowerGen has a strategic tieup on two Birlas projects_the Bina project in Madhya Pradesh and the Rosa project in Uttar Pradesh

The UK major bought the entire promoters' stake in the Torrent group project for Rs 1,100 crore, making it the largest acquisition deal in India.

PowerGen is also negotiating with the Sajjan Jindal group to replace the Belgian power major Tractebel in Jindal Tractebel Power Co and pick up a minority 49 per cent stake for around $42 million.