Bangalore-headquartered GMR Group has entered into an agreement to divest its 50 per cent shareholding interest in InterGen N V to China Huaneng Group, the largest power generation company in China, for an equity value of $1,232 million.
The transaction is subject to customary regulatory approvals in each of the jurisdictions where InterGen has operations, as well as approval of the government of the People's Republic of China. The deal is expected to close in the first half of 2011, GMR said in a statement.
InterGen N.V. is a leading global power generation company with power plants in UK, the Netherlands, Mexico, Philippines and Australia, with a total gross operational capacity of 8,146 megawatt (Mw). GMR acquired 50 per cent stake in the company in October 2008 for an equity value of $1,135 million.
Commenting on the transaction, G.M. Rao, chairman, GMR Group said: "The decision to divest our 50 per cent stake in InterGen is in line with the strategy to focus more on the Indian market where GMR is already a market leader. This divestment will enable GMR Group to deploy further capital and release substantial management bandwidth to focus on its Indian Investments."
He added: "During the last two years of GMR's management of InterGen as a shareholder, InterGen has emerged as a more efficient and strong power producer. We believe that Huaneng will be an ideal partner in the next phase of InterGen's growth."
"The overseas company holding Intergen shares is having a debt of $1,007 million as of date and the sale would release $225 million equity that can be utilised for ongoing projects of the Group."
The Global Energy and Power Teams of BofA Merrill Lynch and White & Case LLP are acting as financial advisors and legal counsels respectively to GMR.