Tata Power, ICICI Venture team up, eye power assets

MUMBAI: With the government relaxing rules following a surge in bad loans, funds have been attracted by the prospects of acquiring troubled assets at deep discounts.

Tata Power, which pioneered electricity generation in the country, and ICICI Venture, one of India's biggest domestic private equity fund, on Friday teamed up to take over stressed power assets in Asia's third largest economy. The Tata Power-ICICI Venture is the latest alliance in the stressed assets space after Piramal-Bain Capital Credit and Brookfield-SBI.

Tata Power holds a 26 per cent stake in the newly incorporated company, called Resurgent Power Ventures. While ICICI Venture will be responsible for organising equity and debt financing for the acquisitions, Tata Power will manage the operations of the coal-fired and hydro power plants.

Resurgent, constituted in Singapore, has got the backing of Canada's second largest pension fund, Caisse de depot et placement du Quebec, and of sovereign wealth funds—Kuwait Investment Authority and State General Reserve Fund of Oman. The power platform will initially raise $850 million with the three global funds putting in about $500 million. The capital can be upsized going forward, depending on market opportunities, the companies said in a joint statement.

Resurgent intends to acquire controlling stakes in conventional and non-conventional power projects that are either completed or nearing completion.

Tata Power has routed its equity in Resurgent through its wholly owned subsidiary Tata Power International, while ICICI Venture has structured its investment through parent ICICI Bank's Bahrain branch. The power sector, which is laden with high debt, has seen several developers putting their assets on the block.