GVK Power shares rise 7% on Hancock deal; Goldman maintains 'Hold'
GVK shares rose 7% in early trade on Monday after it announced to pay $1.26 bn for a majority stake in Hancock Group.
By Kshitij Anand, ET Online |
NEW DELHI: Shares in GVK Power and Infrastructure Ltd rose 7 per cent in early trade on Monday after the company announced it would pay $1.26 billion for a majority stake in three coal mines, a port and rail project owned by Australia 's Hancock Group.
According to an ET report, GVK said the deal, which includes acquiring majority holding in coal resources, railway line and port infrastructure projects of Hancock Coal, will offer the Hyderabad-based company option for long term coal supply contracts for the purchase of up to 20 million tonnes every year.
GVK will pay the consideration in a phased manner to the Hancock Group, with $500 million upfront. About $200 million will be paid in one year from closing the deal and another $560 million on financial closure of the project, which is expected next year.
In an interview with ET Now, GV Krishna Reddy, Founder & Chairman, GVK said the entire acquisition of Hancock mine will be funded via debt and have commitment from PE players for some equity infusion.
The stock, which started the day on a robust note, jumped by 7 per cent to touch an early high of Rs 18.20 on the Bombay Stock Exchange.
At 09:57 a.m., shares in the company were trading 4.1% higher at Rs 17.70. In a recent brokerage review, Goldman Sachs maintained 'Hold' on GVK Power and Infra with a price target of Rs 23.
The Hyderabad-based infrastructure group said it has tied-up the funding for the acquisition with banks and the financing documents for funding the acquisition are being executed with the banks and the transaction is expected to close and assets transferred in about two weeks.
"Mine development, rail and port infrastructure will cost around $10 billion," added GV Krishna Reddy.
According to an ET report, GVK said the deal, which includes acquiring majority holding in coal resources, railway line and port infrastructure projects of Hancock Coal, will offer the Hyderabad-based company option for long term coal supply contracts for the purchase of up to 20 million tonnes every year.
GVK will pay the consideration in a phased manner to the Hancock Group, with $500 million upfront. About $200 million will be paid in one year from closing the deal and another $560 million on financial closure of the project, which is expected next year.
In an interview with ET Now, GV Krishna Reddy, Founder & Chairman, GVK said the entire acquisition of Hancock mine will be funded via debt and have commitment from PE players for some equity infusion.
The stock, which started the day on a robust note, jumped by 7 per cent to touch an early high of Rs 18.20 on the Bombay Stock Exchange.
At 09:57 a.m., shares in the company were trading 4.1% higher at Rs 17.70. In a recent brokerage review, Goldman Sachs maintained 'Hold' on GVK Power and Infra with a price target of Rs 23.
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The Hyderabad-based infrastructure group said it has tied-up the funding for the acquisition with banks and the financing documents for funding the acquisition are being executed with the banks and the transaction is expected to close and assets transferred in about two weeks.
"Mine development, rail and port infrastructure will cost around $10 billion," added GV Krishna Reddy.
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