The Torrent Group is set to takeover the Ahmedabad Electricity Company (AEC) following the Gujarat governments decision on Wednesday to divest 10 per cent of its shareholding in the electricity board in favour of Torrent.
The state governments resolution brings the curtains down on the high drama of the AEC takeover bid which began in 1995 on the heels of the public sector restructuring and privatisation programme of the Gujarat government.
AEC will be the second public sector power supplier to be acquired by the Ahmedabad-based Torrent Group after the Surat Electricity Company was taken over by it early this year. The Torrent group, as a whole, plans to invest over Rs 3,500 crore in the Gujarat power sector.
The Torrent group will now own 31.36 per cent of AEC shares, whereas the state governments stake will fall to 18.09 per cent.
Financial institutions (FIs) are still the largest shareholders with 33.76 per cent equity. However, FIs as well as the general public, who hold 16.79 per cent shares in AEC, will be offered Rs 117 per share by Torrent Power to abide by the Sebi Substantial Acquisition and Takeover Act.
The Act requires a takeover bidder to acquire at least 20 per cent more stake from the public including FIs, in the event of his disinvestment acquisition being over two per cent of total shareholdings in the company to be taken over, at the same price as that offered for disinvested shares.
The price of AEC shares has been ruling between Rs 88 and Rs 45 during the last year.
The Torrent Group had originally offered the government Rs 65 per share which was hiked to Rs 132 on a counter offer by Bombay Dyeing of Rs 90. Although the government preferred to distance itself from ensuing disputes among the parties concerned, a final decision in favour of Torrent was on the cards ever since its successful takeover of Surat Electricity.
It may be recalled that the US energy group MCN has a 40 per cent equity stake amounting to Rs 1,100 crore in Torrent Power, according to a joined venture agreement which was signed in March this year.
The joint ventures initial assets were Torrents holdings in the Gujarat Torrent Energy Corporation, the Surat Electricity Company and the Ahmedabad Electricity Company.
Gujarat Torrent Energy Corporation was its initial project to produce 655 mw dual-fuel power which is due to go on stream next month. Initial investment by the American company was $ 56 million against equity in Torrent Power. Torrent Powers current net worth is Rs 316 crore.
AEC will be the second public sector power supplier to be acquired by the Torrent
Group after the Surat Electricity Company was taken over by it early this year.
