GMR Infra rejigs strategy, to keep off global power assets

Infrastructure major GMR Infra is all set to redesign its overseas acquisition strategy. The company would keep off certain sectors while deciding on acquisition opportunities. After selling its major power asset overseas in the form of Intergen, the company has decided not to pursue any power generation assets overseas. Instead, the company would focus more airports and coal mines.

“Airports in emerging markets is the focus area for us. We will also pursue coal assets overseas and it would be mostly to meet our own coal requirements,” A Subba Rao, GMR’s chief financial officer, told DNA.

Intergen, in which GMR had 50% equity, was sold to China Huaneng Group for $1,232 million. In fact, the Intergen investment was proving to be a drain on GMR’s balance sheet with the proportionate profits accruing from Intergen barely taking care of the interest that was being paid out on the borrowings made to acquire the asset.

Blaming it on the global recession for the investment going bad, Rao said, “There were certain reasons that were not in our control. Added to that was the global recession. Even while we were still with the asset, we had an opportunity in the form of a buyer and we had decided to exit the asset.”

The conclusion of the deal with China Huaneng, which was formally announced on Tuesday, would reduce the group’s debt liability to $1 billion in addition to releasing about $225 million, which was locked up in the form of equity in Intergen.

“The equity portion will now become part of the company’s fund pool and would be deployed for pursuing other opportunities,” Rao said. 

The would now pursue mostly Indian opportunities in power and road projects.

“We have about $1 billion worth works going on in the roads segment. Another $5 billion worth works are in progress in the energy segment in addition to about half-a-billion dollar works in the airports segment,” he said.

For the current fiscal, the company is planning for a capital expenditure of about Rs16,000 crore. “Funding is not a problem and we are not planning any fresh fundraising now. We have recently raised about $200 million and another $150 million funding is awaiting approvals,” Rao said.