GMR Infrastructure is selling a 30 per cent equity stake in its subsidiary GMR Energy Ltd (GEL) to Malaysia’s Tenaga Nasional Berhad for ₹2,000 crore ($300 million). The Malaysian power major has an option to invest further in more GEL assets.
In a teleconference organised on Monday to announce the equity dilution, GMR Corporate Chairman Kiran Kumar Grandhi said the firm would use the proceeds to retire GEL’s debt. After the funding infusion, the energy arm’s debt will come down to ₹750 crore, he said, resulting in a saving of ₹250 crore a year in interest payments.
GMR Infrastructure’s total debt stands at ₹43,439.60 crore. The firm had launched an asset-light strategy a couple of years ago to reduce its mounting debt burden.
Besides the funds infusion into GMR Energy, the Malaysian firm will bring in its expertise in generation, distribution and in the infrastructure sector.
“The capital infusion will strengthen our balance sheet. It will help us reduce the consolidated corporate debt. The Malaysian firm has a right to take part in other projects of GEL in Chhattisgarh and other places,” said Grandhi, son of GM Rao, Chairman of the GMR Group.
The Management Committee of GMR Infrastructure has approved Tenaga Nasional Berhad’s investments in “select” GEL assets.
According to a communication put out by GMR, all convertible instruments (held by private equity players) will be “converted into equity shares prior to the transaction”. The revised ownership structure would see GMR Infrastructure’s come down from 93.5 per cent to 52 per cent. PE players will see their holding rise from 6.5 per cent to 18 per cent, and Tenaga will hold 30 per cent.
A power utility major in Malaysia, Tenaga has a total installed capacity of 10,818 MW and a share of 50 per cent in the grid’s generation capacity.
GMR Energy has power plants with a total capacity of 4,630 MW, with 2,300 MW of operational projects and 2,330 MW ‘pipeline’ capacity.