According to a statement from GMR, the Chinese company has agreed to pay $1,232 million for acquiring the stake. Though regulatory approvals for the deal are still pending, the transaction is expected to be complete in the first half of 2011.
China Huaneng Group is acquiring the 50% share owned by GMR group in its overseas power company InterGen.
According to a statement from GMR, the Chinese company has agreed to pay $1,232 million for acquiring the stake. Though regulatory approvals for the deal are still pending, the transaction is expected to be complete in the first half of 2011.
InterGen is a leading global power generation company with power plants located in the UK, the Netherlands, Mexico, the Philippines and Australia with a total gross operational capacity of 8,146 mw.
GMR acquired 50% stake in InterGen in October 2008 for an equity value of $1,135 million.
The balance 50% stake in Intergen is currently with Ontario Teachers’ Pension Plan.
GMR has been working on a plan to sell off the equity holding in InterGen for sometime now with the investment not adding much to its topline or bottomline. In fact, the company has been incurring more expenditure towards the interest on the loan taken for acquiring the stake than the share in profits from the power company.
The overseas company holding Intergen shares has a debt of $1,007 million as of date and the sale would release $225 million equity that is expected to be utilised for ongoing projects of the group.
“The decision to divest our 50% stake in InterGen is in line with the strategy to focus more on Indian market where GMR is already a market leader. This divestment will enable GMR Group to deploy further capital and release substantial management bandwidth to focus on its Indian Investments,” GMR group chairman G M Rao said.
“During the last two years of GMR’s management of InterGen as a shareholder, InterGen has emerged as a more efficient and strong power producer. We believe that Huaneng will be an ideal partner in the next phase of InterGen’s growth,” he said.
A source tracking the developments said that though there were several unsolicited bids from various industry majors for acquiring the InterGen holding, GMR was looking to get up to $1.5 billion from sale of its holding. “The deal value is less than what was expected by the group,” the source said.
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