Private equity majors IDFC Project Equity and Lehman Brothers are in advanced stage of talks to pick up 16.66% in Konaseema Gas Power (KGPL) for around Rs 500 crore, sources told ET. The deal, which is expected to be concluded shortly, values the Andhra Pradesh-based power utility KGPL at around Rs 3,000 crore.
KGPL sources confirmed the fund-raising plans and added that about 8.33 crore shares will be placed to the funds at a price of about Rs 60 per share. Out of the total Rs 500 crore, IDFC would invest Rs 200 crore, while Lehman would pick up stake amounting to Rs 300 crore.
When contacted, the official spokesperson of KGPL declined to comment on the deal. It is learnt that the funds will be utilised for part- financing a 820 mw plant, which is in the second phase of its 1,280 mw project. The first phase has already been completed. The total cost of the second phase would be around Rs 2,800 crore. KGPL is planning to go public during the second half of 2009, once it receives gas supply and is able to commence power generation.
However, details of equity dilution have not been finalised yet. Quite a few power utilities like Adani Power, GMR Power, Videocon Power and Sterlite Power are planning to go public in the near future. There will not be any further equity dilution for Phase II, which will be completed by July 2010, as it is a brownfield expansion.
KGPL has been promoted by institutions like L&T, IL&FS, LIC, GIC, IDBI, International Power Vision, The Infrastructure Fund of India and VBC Ferro Alloys. Each of these institutions hold about 5-10% in the company.
Hyderabad-based, VBC Ferro Alloys holds about 11.5 crore shares, which constitutes to 27% of KGPL. The KGPL plant is located near the Krishna-Godavari basin. The project cost of Phase I was about Rs 1,400 crore. Phase I of the project is set to become operational, but gas supplies to the plant have not commenced yet.
Source: Economic Times