Failed Deal Between Private Equity, Power Producer Over US$111m Investment Breathes Anew

July 27, 2011 / Elizabeth Buckley, Commercial Property Analyst

Private equity firm Blackstone Group (NYSE: BX) has rolled out plans to invest INR 5,000 million ( USD 111 million) in VISA Power Limited, an independent power producer whose core asset is a 1,200 MW captive-mine based, coal power plant in Chhattisgarh.

Failed Deal Between Private Equity, Power Producer Over US$111m Investment Breathes Anew

Blackstone recently backed out from the six-month old talks with Kolkata-based Visa Power over the Rs 500 crore investment in the 1,200-MW power plant in Chhattisgarh, following negotiations made by the power producer with other PE firms for a better valuation, with JM Financial as the advisor, according to people familiar with the development.

VISA Power has a pipeline of a further 6,600 MW under development, including a 1,320 MW coal-based super critical power plant in Orissa, which is also in an advanced stage of development.

The power producer also pushes for the development of power projects in Madhya Pradesh, Jharkhand and Gujarat. VISA Power is part of the INR 50.0 Bn ($1.1 bn) VISA Group, which is a minerals, metals and energy conglomerate with business interests in steel, power, mining, international trading, shipping and logistics.

Its core 1,200 MW Chhattisgarh coal power plant has already secured all the required land, water allotment and other necessary approvals.

Financial closure for the first 600 MW unit is complete, while the second unit is in an advanced stage of completion.

It has placed orders for BTG on BHEL and for BOP on Larsen & Toubro. VISA Power’s core plant has been allotted 22 percent of the coal from the Fatehpur East Coal Block. The Chhattisgarh plant is scheduled to be commissioned in 2013-14.

Commenting on the association, Vishambhar Saran, the Founder and Chairman of the VISA Group, and Chairman of VISA Power said: “The Power sector in India is going through an exciting phase of growth which is critical to sustain the country’s high levels of economic and industrial growth, and unlock India’s economic potential.

“We are glad that Blackstone shares our vision. Hopefully, together we can create a leading power company.”

Vikas Agarwal, the Managing Director of VISA Power added: “We are delighted to partner with Blackstone, one of the world’s foremost private equity investors.

“Our portfolio of projects in coal rich states, combined with Blackstone’s deep understanding of the power business both globally and in India, and their commitment to sharing knowledge and bringing global best practices to their portfolio companies will add immense value to our young and growing company. Together, we hope to form a long and mutually beneficial partnership.”

Akhil Gupta, Chairman and Managing Director of Blackstone Advisors India Private Limited, said: “Investing in the development of infrastructure in India has long been a theme of ours at Blackstone. India needs an investment of c.$200 bn in the power sector, of which c.$50 bn is required in equity, if the country is to continue its rapid economic growth.”

Gupta also added that: “We believe that VISA Power’s core Chhattisgarh plant with its captive mine will have a very competitive cost of generation, and will be among the better positioned IPPs in the country.

“In addition, we have been impressed with the track record of VISA’s promoters and its management team in developing and executing greenfield projects.”

Articles other readers have found interesting...

Top News Stories:

Leave a Reply