The Management Committee of GMR Infrastructure Limited (GIL) has approved the proposed primary capital investment by Tenaga Nasional Berhad (Tenaga) in GMR Energy Limited (GEL). The investment represents 30% equity stake in a select portfolio of GEL assets on fully diluted basis, for cash consideration of US$300 million.
Tenaga is one of the largest power utility player in Malaysia with an integrated presence across the value chain of power generation, transmission & distribution. With a total installed capacity of 10,818 MW and 50% market share of the Malaysian grid’s generation capacity, it has strong pedigree and backing of the Malaysian government. Further, it has significant experience in managing and operating power assets with several thermal power plants, large hydro plants, power distribution business and supporting O&M of independent power producers (IPPs) all over Southeast Asia, South Asia and Turkey.
Through this partnership, GMR Group is bringing a world class power developer and operator in Indian market. Tenaga’s experience would further facilitate GEL in improving the performance of its operational assets and develop it’s under development pipeline of hydro & renewable energy assets. The synergies that would be created will lead to a long and strong partnership benefiting both GEL and the Indian Power sector.
The funds invested would primarily be utilised for repayment of corporate debt. This would lead to a reduction in GIL consolidated corporate debt and will result in a stronger balance sheet.
GEL will manage a balanced portfolio of coal based, gas based and renewable (Hydro & Solar) power projects having a total capacity of 4,630 MW. This portfolio would have an operating capacity of 2,300 MW and pipeline capacity of 2,330 MW.
Moelis & Company acted as the financial advisor to GEL. White & Case LLP, Cyril Amarchand Mangaldas and Krishnamurthy & Co. acted as legal counsel for GEL. While for TNB, Credit Suisse AG acted as the transaction advisor; Slaughter & May and Khaitan & Co acted as the legal counsel and KPMG was the regulatory and financial advisor.
Mr. GM Rao, Group Chairman, GMR Group, said:
“India’s substantial & sustained economic growth will require collaboration from all stakeholders in the power sector. Hon. Prime Minister of India has set a vision of '24x7 Power for All by 2022'. This is being effectively led by Finance Ministry’s efforts on improving the ease of doing business and Power Ministry’s strong commitment to reform the sector. We believe our partnership with a major power sector player like Tenaga is one of the steps to implement the Prime Minister’s vision.”
Mr. GBS Raju, Chairman, GMR Energy added:
“We are very happy to have Tenaga as our strategic partner. This collaboration once again signifies GMR’s commitment & ability to successfully execute strategic partnerships to create value for all its stakeholders. This would provide a renewed impetus to our Energy business and result in a stronger balance sheet enabling the company to capitalise on future growth opportunities”