GMR group has exited its subsidiary GMR Energy (Singapore) Pte Ltd, selling 70% stake to Hong Kong-based FPM Holdings for S$660 million (Rs2,905 crore).
GMR Energy was set up to construct, operate and maintain a 2X400 MW (gross) natural gas fuelled power plant on Jurong Island, Singapore, which is said to be about 96% complete and expected to commence operations by the end of 2013.
Group entities GMR Infrastructure (Singapore) Pte Ltd and GMR Infrastructure held 66.4% and 3.6% stake, respectively, in the subsidiary. The balance 30% was held by Petronas, which is expected to continue in the project.
FPM Power will invest about S$60 million in GMRE as the balance equity.
“This sale translates to an enterprise value (100% basis) for GMRE of S$1,612 million (Rs7,100 crore) on project completion by end 2013. The transaction is subject to approval from project finance lenders to GMRE and is expected to close by end of March, 2013,” a GMR statement said.
The divestment of stake results in a profit of Rs1,356 crore and releases capital amounting to Rs1,616 crore, said GMR.
GMR Infra has been looking to bring down its gross debt, now around Rs43,000 crore, primarily by putting some assets on the block and raising funds.
“The divestment is the off-shoot of the group’s well thought out strategy of an asset right - asset light and cash flow-based model that the Group has embarked in the recent times.
This is the second such strategic move after last month’s divestment of 74% stake in the GMR Jadcherla road project at a premium. The cash flows will help GMR Energy to focus on our domestic energy business and accelerate ongoing projects totalling 5,790 MW,” chairman G M Rao said in the statement.
For the quarter ended December, it reported a net revenue of Rs1,956 crore. Though its operating margins improved to 28% in the quarter, from 21% in the corresponding year-ago quarter, interest and finance costs also increased to `525.3 crore from Rs424 crore. As a result, the company’s losses for the quarter too climbed to Rs217.5 crore from Rs108 crore.
Macquarie Capital India and Standard Chartered Bank have jointly advised GMR on the GMR Energy transaction.