Instead, the Singapore's sovereign investor Temasek Holdingsowned firm has now resolved to buy the 45% stake held by Gayatri Projects in NCC Power Projects and look at buying a majority stake in the joint venture when regulatory hurdles are cleared.
Despite change in Sembcorp's buyout plans, the deal marks a sign of revival of global investors' interest in the Indian power assets after a long lull. Two persons close to the development told ET that Sembcorp has agreed to pay about Rs 850 crore for a 45% stake of Gayatri.
This values the company at around Rs 1,900 crore. The deal is the third in the past few weeks after French power giant GDF Suez agreeing to buy 74% in Meenakshi Energy and Abhu Dhabi Water & Electric Authority emerging the frontrunner to buy hydropower assets of Jaypee Group."While doing the due-diligence exercise over the past few months to buy 55% stake of NCC in the joint venture, Sembcorp was warned by its advisors not to buy NCC's stake in the project," one of the sources quoted above said. "They told Sembcorp that the Indian regulations were not clear about allowing majority partner in the power venture , having coal linkages, to exit the project."
The second source said the NCC management was also advised to obtain lenders' clearances for its plan to exit the project since it involved transferring the entire project debt on to the books of the buyer. "NCC has initiated process to obtain clearances so that it can exit the project at the earliest possible time a nd transfer the entire project debt that is currently reflecting in its books being the majority stakeholder in the joint venture."
Managements of NCC and Gayatri refused to comment on the deal and mails sent to Sembcorp remained unanswered. "Buying 45% stake of Gayatri Projects in NCC Power Projects will definitely be a setback for NCC, which has been badly looking at selling assets to retire debt," said an analyst with a Mumbai-based brokerage tracking the stock, requesting anonymity.
"However, the funds to be infused by Sembcorp will help the nearly stalled power project to progress towards completion and help NCC exit at a later date at better valuations." If it fructifies, the deal will become the third major investment in India for Sembcorp, which had reported revenues of S$10.2 billion in fiscal 2012, and its second in India's power sector.
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