JSW Energy reopens talks with Jaypee Group for buying three power assets

NEW DELHI: Months after initial discussions fell through, Sajjan Jindal-controlled JSW Energy is said to have reopened talks with the Jaypee Group on acquiring three power assets. The two sides are in advanced negotiations for a deal involving two power generation units and a majority stake in a transmission joint venture for an enterprise value of about Rs 5,500 crore, two people aware of the development told ET.
The two utilities are Bina Thermal Power in Madhya Pradesh with an installed capacity of 500 MW and the 400 MW Vishnuprayag Hydro Power in Uttarakhand. Bina can be ramped up further and its capacity trebled. The third asset is a 74 per cent stake in Jaypee Powergrid, a 74:26 joint venture with Power Grid Corporation of India Ltd (PGCIL). All three assets are held by Jaiprakash Power Venture Ltd (JPVL), a majority owned subsidiary of Jaiprakash Associates, and an acquisition agreement could be reached shortly, said the people cited above.

JSW Energy denied that a deal was in the works. "Your query is completely speculative and baseless," a spokesperson said. "As a policy, JSW Energy does not respond to such speculative market rumors which may lead to misleading information in the market."

A Jaypee Group spokesperson declined to comment. "We would not like to respond to market speculations," the executive said.

Jaypee Powergrid has built a 214 km transmission line to connect the Karcham-Wangtoo project in Himachal Pradesh with the northern grid at Yamunanagar in Haryana. JSW had entered into a binding agreement with the Jaypee Group last September for Bina Thermal Power but they couldn’t agree on valuation. The Vishuprayag project was part of an earlier buyout discussion but was damaged in floods in 2013 and needed to be repaired. In this case too, the two sides couldn’t agree on a price.

Under the terms now being discussed, a deal will primarily mean the transfer of debt to Jindal since the equity value would be about Rs 400 crore for the three assets. "Jaypee will transfer a combined debt of about Rs 5,100 crore," said one of the persons cited above.

Jaypee Group has been looking to reduce its Rs 60,000 crore debt burden by selling assets. It has raised about Rs 15,000 crore from the disposal of units since 2013. In addition, it has already entered into a binding agreement to sell cement assets to Ultratech Cement for Rs 15,900 crore. If the deal takes place, this will be the second major acquisition by JSW Energy from the Jaypee Group. In September 2015, it bought the Baspa II unit Karcham-Wangtoo unit for Rs 9,700 crore.