GMR Energy Ltd said it has allotted 30 per cent stake to Tenaga Nasional Berhad, Malaysia for a cash consideration of $300 million.
This implies an equity value of $1 billion (about Rs 6,665 crore) for GMR Energy Ltd.
A subsidiary of GMR Infrastructure Ltd, GMR Energy and Tenaga had announced this strategic partnership in May 2016 and the allotment of shares marks the completion of this major transaction in the country's power sector.
Following the deal, while GMR Infrastructure Ltd and its associates will hold 52.14 per cent equity, Tenaga Nasional Berhad (30 per cent) and the balance of 17.86 per cent will be held by Private Equity Investors Temasek, IDFC and others.
GMR Energy now has a diversified portfolio of coal based, gas based and renewable energy (both solar and hydel) power assets having a total capacity of 4,630 MW. The portfolio comprises of operating capacity of 2,300 MW and a pipeline capacity of 2,330 MW.
GMR aims to reduce its corporate debt through this divestment, attract foreign capital, both equity and debt.
GBS Raju, Chairman of GMR Energy Ltd, said, “This re-emphasises GMR's commitment and ability to execute strategic partnerships to create value to all its stakeholders. This would provide a renewed impetus to our energy business and result in stronger balance sheet enabling he company to capitalise on future growth opportunities.”
This foreign direct investment from Tenaga is the first of its kind in the Indian power sector and represents the strengths in the industry in spite of the headwinds being faced over the last few years.
The transaction is also expected to have a cascading effect on the country's power sector and pave way for more foreign investments.