TNB picks up 30% equity stake in GMR Energy’s select portfolio of assets

Malaysian power utility,Tenaga Nasional Berhad (“TNB”) has announced its entry into Indian power sector after signing a Subscription Agreement (“SA”) and Shareholders Agreement (“SHA”) with GMR Energy Limited (“GEL”).

The Management Committee of GMR Infrastructure Limited (GIL) 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.

The transaction is expected to be completed within the next three to six months. It will also strengthen a strategic partnership with GMR Infrastructure Limited (“GIL”).

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. An additional four power assets are currently under various stages of completion in India and Nepal with a combined generation capacity of 2,300MW. Tenaga has the right to invest in Chhattisgarh and other assets at any time within the next five years.

Datuk Seri Ir. Azman Mohd, President/Chief Executive Officer TNB said “TNB’s investment in GEL Energy meets all its investment criteria as this deal delivers tremendous potential and unlocks significant value. It places TNB in prime position to benefit from India’s superior long-term electricity consumption growth potential, in one of the world’s largest emerging economies. It also offers multiple avenues for growth in India’s power sector, beyond generation, with the prospect of pan- Indian development.” He further aaded “we welcome the opportunity to enter into a long-term working relationship with a best-in-class strategic partner with in-depth knowledge of the Indian power market, bring together our respective strengths and unleash synergies that will allow TNB to create a strong foothold and maximise opportunities inherent in the Indian power market which is adding 20GW of power annually.”

Commenting on the development, 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 ’24×7 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.”

TNB notes that investment will be financed by a combination of internal funds and/or external debt.