(MENAFN-Khaleej Times) The enterprise value of deal is pegged at $1
The equity invested by Taqa-led consortium in the acquisition will amount to $616 million. — Wam file photo
A consortium led by Abu Dhabi National Energy Company, or Taqa, has agreed to acquire two hydroelectric plants in India with combined capacity to generate 1,391 megawatts.
The enterprise value of the deal is pegged at around $1.6 billion comprising both debt and equity.
The agreement follows the signing of the UAE-India Bilateral Investment Promotion and Protection Agreement in December 2013 and a commitment made by the UAE to invest $2 billion in India’s infrastructure sector at the first UAE-India High Level Joint Task Force on Investments meeting held in Abu Dhabi in February 2013.
The consortium agreed to purchase the Baspa Stage II and Karcham Wangtoo plants in the northern state of Himachal Pradesh from Jaiprakash Power Ventures Limited, a subsidiary of Indian infrastructure conglomerate, Jaypee Group.
Taqa, which holds a 51 per cent stake in the consortium, will have control of operations and management of both facilities under the proposed deal.
The remaining 39 per cent equity will be held by one of Canada’s largest institutional investors and ten per cent by IDFC Alternatives’ India Infrastructure Fund II.
The equity invested by the consortium in the acquisition will amount to approximately $616 million, of which 51 per cent is from Taqa. The consortium will also acquire the assets’ non-recourse project debt.
Commenting on the acquisition Frank Perez, Taqa’s executive officer and head of Global Power and Water, said: “These two hydropower assets will boost our growing India business, and support India’s economic growth.”
Both plants are located in Kinnaur district within two kilometres of each other and share support facilities. They use run-of-the-river technology to convert natural water flow to electricity eliminating the need for a reservoir. The plants are 35 kilometres from the Sorang hydroelectric plant, in which Taqa acquired a stake last year.
Following the completion of the transaction, Taqa’s gross operational power generation capacity in India will total 1,741MW comprised of three hydroelectric facilities and one lignite power plant. The acquisition is expected to close in 2014 and is subject to regulatory and third party approvals. This investment will be recognised at the second meeting of the UAE-India High Level Joint Task Force in Mumbai on Monday co-chaired by Shaikh Hamed bin Zayed Al Nahyan, Chairman of the Abu Dhabi Crown Prince Court, and Anand Sharma, India’s Minister of Commerce and Industry.
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