Barely a day after the collapse of Reliance Power Ltd’s Rs. 12,000-crore acquisition bid of Jaiprakash Power Ventures Ltd’s (JPVL’s) three hydropower projects, Sajjan Jindal-led domestic conglomerate JSW Group’s energy firm stepped in on Thursday to lap up two of the hydropower projects and another thermal power unit of the Noida-based group.
JSW Energy is the third suitor for parent Jaypee Group’s power plants after the deal with Reliance Power and a consortium led by Abu Dhabi National Energy Co failed to fructify earlier this year. The sale of the power plants is central to Jaypee Group’s efforts to reduce its burgeoning debt of around Rs. 60,000 crore.
JSW Energy said it has signed binding memorandum of understanding (MoU) with JPVL for three operating plants — Baspa Stage II and Karcham Wangtoo in Himachal Pradesh and Bina Thermal power plant in Madhya Pradesh — with an aggregate capacity of 1,891 mega watt.
The deal with Reliance collapsed on Wednesday reportedly due to lack of clarity on capacity at the Karcham Wangtoo project.
JSW Group did not divulge the exact size of the deal but indicated it would raise debt to fund the deal. JSW Energy’s current power production capacity stands at 3,140 MW and should the deal fructify, its capacity would go up by over 50%.
All its existing power capacity is thermal. The company’s website says fresh capacity of another 8,630 MW is under implementation and the firm envisions achieving a power generation of 11,770 MW. No timeline has been given for that target.
Jaypee Group, which also has interests in cement, construction, infrastructure, hospitality and fertiliser, has one of the highest debt among Asian companies manufacturing construction material. The firm that made India’s only Formula 1 track on the outskirts of Delhi, is also in talks to sell some of its cement factories.
News of the collapse of the deal with Reliance Power saw JPVL’s share price plummet nearly 14% at `11.75 per share at the Bombay Stock Exchange on Thursday. Group firms Jaiprakash Associates and Jaypee Infratech’s share tanked 19.15% and 13.45% respectively.
JSW Energy’s shares fell 6.1% at `72.30 per share. News of the acquisition came after the trading closed.