Jaiprakash Power Ventures Ltd. (JPVL), the debt-laden Indian generator, rose the most in more than two months after Reliance Power Ltd. (RPWR) agreed to buy its three existing hydro-power plants valued at $1.7 billion.
Unit Reliance CleanGen will take over Jaiprakash’s hydro-power plants in the country that have a combined capacity of 1,791 megawatts, according to a statement yesterday from billionaire Anil Ambani-controlled Reliance. Jaiprakash Power and its units had 244.6 billion rupees ($4.1 billion) of total debt and 6.2 billion rupees of cash and equivalents as of March 31, according to data compiled by Bloomberg.
Reliance Power said Jaiprakash’s three plants are worth more than 100 billion rupees. A purchase at that value will give Reliance Power, which currently operates 4,525 megawatts of generation capacity, ownership of cleaner hydro-based facilities at about 55 million rupees a megawatt. The cost of setting up a new hydro project is approximately 70 million rupees a megawatt.
“This is great for Jaiprakash as it’ll help it cut debt,” said P. Phani Sekhar, a Mumbai-based fund manager at Angel Broking Ltd. “The hydro-power plants are operational assets, and will help increase Reliance Power’s cash flows.”
Reliance Power didn’t disclose the terms of the transaction.
Jaiprakash shares jumped as much as 8.7 percent to 20.60 rupees and traded at 19.70 rupees as of 11:26 a.m. in Mumbai. The shares have gained 4.2 percent this year, compared with a 23 percent increase in the benchmark S&P BSE Sensex.
Reliance Power shares gained as much as 3.1 percent to 93.60 rupees and traded at 92.80 rupees as of 11:26 a.m. The shares are up 27 percent this year.
Abu Dhabi National Energy Co. withdrew an agreement to buy two of Jaiprakash’s plants, the Indian company said in a July 24 statement, citing a change in the strategy of the Abu Dhabi company, known as TAQA.
Reliance has agreed to buy Jaiprakash’s Baspa and Karcham Wangtoo plants in the northern state of Himachal Pradesh and the Vishnuprayag plant in neighboring Uttarakhand, according to the statement.
Jaiprakash is building an additional four hydro-electric plants in the northeastern states of Arunachal Pradesh and Meghalaya, with a combined capacity of 3,920 megawatts, according to its website.
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