Reliance Power picks up Jaypee’s entire hydro assets for Rs15,000 cr

Anil Ambani's Reliance Power Ltd on Sunday announced that it has acquired the entire hydropower portfolio of Jaiprakash Power Ventures for an estimated Rs15,000 crore.

The deal with Reliance comes after the Abu Dhabi National Energy Co (Taqa) backed out of a Rs10,500-crore agreement to buy two hydro plants -   the 1000 MW Karcham Wangtoo and 300 MW Baspa II projects  -  of the debt-laden Jaypee group (See: Taqa pulls out from deal to buy two JP Power plants in Himachal).

Manoj Gaur, Executive Chairman, Jaypee Group had then said Taqa's withdrawal "will, however, not impact our Group's commitment to reduce debt to Rs 45,000 by March 2015. We have created valuable assets and we are confident to get investors to help us raise funds in the near future.'' 

Reliance Power will now be executing the deal through its 100-per cent subsidiary Reliance CleanGen. Jaiprakash Power is a subsidiary of Jaiprakash Associates Ltd. SBI Capital Markets was the advisor for the transaction.

Industry players term this as the largest merger and acquisition in the country's power sector, based on the generation capacity and size of the assets being acquired.

''Jaiprakash Associates intends to utilise the entire proceeds of the proposed transaction to reduce its outstanding debt,'' a joint statement issued by Reliance Power and Jaiprakash Power said.

The deal, upon completion, will make Reliance Power the largest generator of hydropower in the private sector, with 7,800 MW operating capacity by the end of the 2015 financial year. The acquisition will help Reliance Power diversify its largely coal-based portfolio. Currently, the company has operational capacity of 4,525 MW, of which, 85 MW comes from a combination of wind and solar power.

The deal will enable Reliance Power's subsidiary to acquire the 300 MW Baspa II and the 1,091 MW Karcham Wangtoo plants in Himachal Pradesh, which Taqa had initially agreed to purchase. The deal also includes the 400 MW Vishnuprayag plant in Uttarakhand. All the three power plants are operational and are river-fed, eliminating the need for reservoirs.

Jaiprakash Associates is the flagship company of the Delhi-based Jaypee Group which has interests in cement, infrastructure, real estate, power, hospitality and sports. The group has a debt of Rs55,000-56,000 crore, although some brokerage firms such as Credit Suisse estimate it to be as high as Rs64,000 crore.

The group had a target of bringing down its debt by Rs15,000 crore by the end of the current fiscal and had kick-started its asset monetisation programme last year when it sold its cement manufacturing unit in Gujarat to UltraTech Cement to bring down its debt by Rs3,800 crore.