State-run TAQA, with 51 percent of the consortium, will control the operations and management of both plants under the deal. PSP Investments, one of Canada's largest institutional investors, will own 39 percent and an infrastructure fund run by India's IDFC Alternatives will hold 10 percent.
The two plants, located close to each other in the northern state of Himachal Pradesh, have a combined generating capacity of 1,391 megawatts, and are near another Indian hydroelectric plant in which TAQA acquired a stake last year.
Along with a lignite power plant owned by TAQA, the latest deal will bring TAQA's combined generating capacity in India to 1,741 MW. The deal, which needs regulatory and third-party approvals, is expected to close in 2014, TAQA said.
Shares in Jaiprakash jumped 12 percent on Friday in anticipation of the deal; Reuters reported early last month that it was close to being signed. On Friday, the Indian company said its board would meet on Saturday to consider recommendations for cutting debt and boosting shareholder value.