JSW Energy snaps up Jaypee unit

JSW Energy is acquiring the Bina power plant of Jaiprakash Power Ventures (JPVL) for an enterprise value of Rs 2,700 crore.

By Our Special Correspondent in Mumbai
  • Published 19.07.16

Mumbai, July 18: JSW Energy is acquiring the Bina power plant of Jaiprakash Power Ventures (JPVL) for an enterprise value of Rs 2,700 crore.

The sale of the 500MW thermal power plant will first see JPVL transfer the unit to its subsidiary Bina Power Supply Ltd (BPSL).

In a late evening filing made to the bourses today, JPVL said its board of directors had approved a securities purchase agreement with JSW Energy.

"The consideration to be received from JSW is linked to a base enterprise value as on September 1, 2015 of Rs 2,700 crore for sale of 100 per cent securities of BPSL,'' it said.

The division posted a turnover of Rs 896 crore for JPVL for the year ended March 31, 2016, which was close to 23 per cent of its topline.

In the preceding year, the unit generated a turnover of nearly Rs 1,233 crore.

JPVL said the sale will enable it to deleverage its balance sheet by reducing debt and interest outgo.

The transaction is expected to be completed by May 2017, subject to various regulatory and other approvals, and any other mutually agreed extension.

JSW Energy said after the acquisition, its aggregate installed and operational power generation capacity will increase to 6,031MW from 5,531MW. This includes the recent deal to acquire a 1000MW power plant from Jindal Steel & Power Ltd.

JSW Energy said the acquisition was also beneficial in that it will lead to an increase in the proportion of long term power purchase agreements (PPA).

The target special purpose vehicle (BPSL) has a long-term purchase pact for 70 per cent of its capacity.

"The proposed acquisition of the 2x250MW power plant at Bina, Madhya Pradesh, is a right fit to the existing portfolio of power generating assets. The acquisition will enable the diversification of geographical footprint and fuel source, thereby strengthening the existing business model," JSW Energy said.

In its meeting today, the board of JSW Energy has also decided to acquire 100 per cent of Minerals & Energy Swaziland (Pty) Ltd, which has a prospecting licence for coal found over 8,000 hectares of land in Swaziland.

The company needs imported coal of around seven million tonnes, which is sourced from the market.

The acquisition is in line with its strategy to insulate from market fluctuations.