RPower to buy Jaypee group hydro projects for ₹15,000 cr

Reliance Power Ltd, an Anil Ambani Group firm, has acquired the entire hydro power portfolio of Jaiprakash Power Ventures for an estimated ₹15,000 crore.

The announcement made on Sunday comes on the heels of Abu Dhabi National Energy Company (Taqa) backing out of the ₹10,500-crore deal to buy two hydro plants of debt-laden Jaiprakash Power.

Reliance Power will now be executing the deal through its 100 per cent subsidiary Reliance CleanGen. Jaiprakash Power is a subsidiary of Jaiprakash Associates Ltd. SBI Capital Markets was the advisor for the transaction.

Largest M&A deal in sector Industry insiders term the deal as the largest merger and acquisition deal in the country’s power sector, based on the generation capacity and size of the assets being acquired.

“Jaiprakash Associates intends to utilise the entire proceeds of the proposed transaction to reduce its outstanding debt,” a joint statement issued by Reliance Power and Jaiprakash Power said.

The deal, upon completion, will make Reliance Power the largest generator of hydro power in the private sector, with 7,800 MW operating capacity by the end of the 2015 fiscal. The acquisition will help Reliance Power diversify its largely coal-based portfolio. Currently, the company has operational capacity of 4,525 MW, of which, 85 MW comes from a combination of wind and solar power.

The deal will enable Reliance Power’s subsidiary to acquire the 300 MW Baspa II and the 1,091 MW Karcham Wangtoo plants in Himachal Pradesh, which Taqa had initially agreed to purchase. The deal also includes the 400 MW Vishnuprayag plant in Uttarakhand. All the three power plants are operational and are river-fed, eliminating the need for reservoirs. Jaiprakash Associates is the flagship company of the Delhi-based Jaypee Group which has interests in cement, infrastructure, real estate, power, hospitality and sports. The group has a debt of ₹55,000-56,000 crore, although some brokerage firms such as Credit Suisse estimate it to be as high as ₹64,000 crore.

The group had a target of bringing down its debt by ₹15,000 crore by the end of the current fiscal and had kick-started its asset monetisation programme last year when it sold its cement manufacturing unit in Gujarat to UltraTech Cement to bring down its debt by ₹3,800 crore.