The GMR Group has signed up to sell its 70 per cent stake in GMR Energy (Singapore) Pte Ltd to FPM Power Holdings Ltd for S$660 million (about Rs 2,650 crore).
GMR said selling the stake would result in a profit of Rs 1,356 crore and would release capital of Rs 1,616 crore.
FPM Power will invest S$60 million in GMR Energy as the balance equity. The sale translates to GMRE enterprise value of S$1,612 million ($1,293 million) on project completion by this year-end.
The transaction is subject to approval from project finance lenders to GMRE and is expected to close by end of the month.
GMRE was established to develop and maintain a 2x400 MW natural gas-based power plant on Jurong Island, Singapore. The plant is nearly 96 per cent complete and is expected to commence operations by this year-end.
Infrastructure companies such as GMR have been looking to sell stake in some of the projects to reduce their debt. In February, GMR sold a 74 per cent stake in a road project in Andhra Pradesh for about Rs 206 crore. GMR said it had invested Rs 146 crore for this stake.
G.M. Rao, Group Chairman, in a statement said: “GMR Energy Singapore project is on schedule and within the budget.
“The divestment is the off-shoot of the Group’s strategy of an Asset Right-Asset Light and cash flow-based model.”
GMR Infrastructure (Singapore) Pte Ltd owns 66.4 per cent of GMRE and 3.6 per cent is held by GMR Infrastructure Ltd. The balance 30 per cent stake in GMRE is held by Petronas, which will continue to stay invested in the project.
FPM Power is a 60:40 joint venture established between First Pacific Company Ltd and Meralco Power Gen Corporation, a wholly-owned subsidiary of Manila Electric Company.
The cash flows will help GMR Energy to focus on the domestic energy business and accelerate projects with total capacity of 5,790 MW.
rishikumar.vundi@thehindu.co.in