The Management Committee of GMR Infrastructure Limited (GIL) today 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 USD 300mn.
Tenaga is 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.
List of Projects under GEL
|Operational Capacity – 2300 MW
||Pipeline Capacity – 2330 MW
|EMCO (Warora) – 600 MW
||Kamalanga Unit 4 – 350 MW
|Kamalanga – 1,050 MW
||Bajoli Holi Hydro Project – 180 MW
|Vemagiri – 388 MW
||Upper Karnali Hydro Project – 900 MW
|Barge – 235 MW
||Upper Marsyangdi Hydro Project – 600 MW
|Gujarat Solar – 25 MW
||Alaknanda Hydro Project – 300 MW
Further, Tenaga has the right to invest in Chhattisgarh and other assets at any time within the next five years.
Commenting on the development, 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”.
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.
About GMR Infrastructure Limited
GMR Group is a leading global infrastructure conglomerate with interests in Airport, Energy, Transportation and Urban Infrastructure. The group has fifteen power generation projects, nine operating road assets and a double rail track line of eastern dedicated freight corridor under development.
GMR Group developed and operates India’s busiest and currently World’s No. 1 Indira Gandhi International Airport in New Delhi and greenfield Rajiv Gandhi International Airport at Hyderabad. GMR Infrastructure in partnership with Megawide Construction Corporation is developing Mactan Cebu International Airport (MCIA) in Philippines. The Group is also developing two Special Investment Regions at Krishnagiri and Kakinada and India’s largest Smart Airport City near Hyderabad International Airport.
About GMR Energy Limited
GMR Energy is a part of the GMR Group, which is one of the largest diversified Infrastructure Conglomerates in India.
With an operating capacity of over 4,200 MW, it has a balanced fuel mix of coal, gas as well as renewable sources of wind and solar energy. Apart from this, plants of over 2,300 MW generation capacities are under various stages of completion/ development in India and Nepal.
About Tenaga Nasional Berhad (TNB)
Incorporated in Malaysia in 1990 as a public company, TNB was listed on the Main Board (now known as the Main Market) of Bursa Malaysia Securities Berhad on 28 May 1992. TNB is the largest electricity utility in Malaysia and one of the largest power companies in Southeast Asia. TNB’s core businesses span the entire value chain of electricity production and supply encompassing Generation, Transmission and Distribution.
While, the Generation Division operates six thermal power stations and three major hydroelectric power generating schemes in addition to supporting the operations and maintenance of three Independent Power Producers (IPPs), the Transmission Division connects power generated by TNB and IPPs throughout Peninsular Malaysia with Distribution’s network as well as directly to large industrial customers via the National Grid. The Distribution Division supplies end users, with a keen focus on delivering a world-class customer experience.
Through its subsidiaries, TNB is also involved in energy-related operations such as the manufacture of transformers, high-voltage switchgears and cables; the provision of professional consultancy services; architectural, civil, electrical engineering works and services, and repair and maintenance.
TNB is a blue chip company listed on the Bursa Malaysia with a market cap of US ~$20bn. In FY’15, TNB generated a turnover of ~US$10.3bn and an EBITDA of ~US$3.3bn.
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