Hyderabad-based GMR has announced the completion of its previously announced acquisition of a 50-per cent stake in the Netherlands-based global power generation company InterGen N V for $954 million from AIG Highstar Capital II, L P, a private equity fund sponsored by AIG Global Investment Group, an indirect subsidiary of the stricken American International Group, Inc that has received a $85 billion infusion from the US government ( See: Fed pumps another $37.8 billion in AIG) .

GMR Infrastructure Limited now jointly owns InterGen with the Ontario Teachers' Pension Plan, one of Canada's largest financial institutions with net assets of $85 billion. Ontario Teachers' has been a 50-per cent owner of InterGen since 2005.

This is GMR's second international transaction after it acquireda 20-year operations licence to operate Istanbul's Sabiha Gökçen International  in May 2008, after its expansion and modernisation (See: GMR takes over Istanbul airport for modernisation and operations). The airport is located on the Asian side of Istanbul, and would help  ease the pressure on the main Ataturk International Airport located on the European side of the city.

InterGen is a global power generation firm with 12 power plants representing a total generation capacity of 812,766 MW (8,086 MW of operational capacity and 4,680 MW under development) located in the UK, the Netherlands, Mexico, the Philippines and Australia. These facilities include 5,803 net equity MW in operation and 428 MW under construction.

GMR said that it had signed definitive agreements with the sellers, AIG Highstar Capital and its affiliates, on 20 June and sought various antitrust approvals in US, Europe, Mexico, Australia and the Philippines, following which  it completed the transaction on 9 October.

GMR will finance the acquisition cost through debt funding from Axis Bank, ICICI Bank, Bank of India, Canara Bank, Bank of Baroda and Indian Bank.
This transaction was executed through financial advisor N M Rothschild & Sons, and legal advisor White & Case LLP.

G M Rao, group chairman, GMR Group, said, ''The transaction has been consummated under highly tense market conditions, signifying GMR Group's strength in the market place."
Rao said, "The acquisition of a 50-per cent equity stake in InterGen is an integral part of our global strategy to be the world's leading energy and infrastructure company. This acquisition will provide us a platform to expand in InterGen's existing geographies and new geographies of strategic importance to both GMR and Ontario Teachers Pension Plan. Such growth will be supported by the strong management, high quality assets and a partner like Ontario Teachers Pension Plan, which is also a leading global infrastructure investor.''

Neil Smith, President & CEO of InterGen N.V. added ''We are very pleased that GMR, with its significant power and infrastructure development experience, has successfully completed this strategic investment in InterGen. This is a positive step in strengthening our position as a leading owner, operator and developer of global power projects.''

InterGen has developed, commissioned and operated over 20 different plants totaling over 16,000 MW of generation capacity in 10 different countries, since its inception in 1995. The InterGen power facilities are new and represent the most modern, efficient and cleanest thermal facilities in the countries where they operate. Compared with older technologies, InterGen's facilities burn less fuel for every megawatt of power generated with significantly lower emissions.

InterGen was formed as a power generatin venture between Bechtel Energy NV, the Dutch arm of US construction giant Bechtel, and PG&E Corporation. In 1997, Bechtel purchased all of PG&E's interest in InterGen and later that year sold a 50-per cent interest to Shell Generating Limited, a subsidiary of The Royal Dutch/Shell a subsidiary of The Royal Dutch/Shell Group. In 2005, Shell and Bechtel sold all of their combined interests in the Company to Highstar and Teachers'.

Last week  InterGen announced having acquired two Mexico facilities, a 252 MW Campeche facility and the 259 MW Chihuahua facility from TransAlta Corporation for the $303.5 million. It now owns and operates four facilities in Mexico, totaling 2,211 MW with the addition of Campeche and Chihuahua.

GMR has ten power projects – three in operation and seven under development, and six road projects of which two are in operation and four under development. The company is also developing a 3300 acres multi product SEZ in Tamil Nadu.

GMR recently completed and commissioned the Greenfield International Airport at Hyderabad. The Group, besides operating and modernising the existing Delhi International Airport is also building a new Terminal in Delhi. On similar lines it is also upgrading the Sabiha Gökçen International Airport in Istanbul, Turkey.