Malaysia’s Tenaga to invest $300m in GMR Energy Ltd

Tenaga Nasional Bhd to invest $300 million in select portfolio assets of GMR Energy

The Dollar Business Bureau


GMR Infrastructure Ltd said on Monday that Tenaga Nasional Bhd (TNB), Malaysia’s largest power utility company, will invest $300 million in its subsidiary GMR Energy Ltd (GEL).

“Tenaga Nasional Berhad has agreed to invest about Rs.2,000 crore ($300 million) for a 30 percent stake in select portfolio of assets in GMR’s energy arm GEL,” the company said in a statement.

The funds from the sale of stakes would mainly be utilised for repaying the corporate debt, it added.

After this deal, GMR Infrastructure would be able to lessen down its corporate debt to Rs.4,300 crore from the existing Rs.6,300 crore.

The company said that this would lead to a decline in consolidated corporate debt of GMR Infrastructure and will result in a stronger financial statement.

“We are happy that Tenaga is our strategic partner. This agreement once again indicates our commitment and ability to effectively implement strategic partnerships to generate value for all the stakeholders of GMR. This would give a renewed push to GMR’s Energy business and a positive effect on the company’s balance sheet, making it to capitalise on growth opportunities in future,” said GBS Raju, Chairman, GEL.

As per the deal, TNB will hold 30 percent stake in power projects having a total capacity of 4,630 MW. This includes operational capacity of 2,300 MW with the rest in the pipeline. The deal will also cover all the pipeline projects, mainly hydro power capacity, of which two of them are in Nepal.

In addition, TNB has the first right to invest in other assets of GEL at any time within a period of five years.

TNB, a $20 billion company based in Malaysia, said that its entry into India was more due to an attractive opportunity of investment with the favourable economic outlook and steady political landscape bringing about change and growth in the country, with a rapid growth in the energy sector.

At the end of March 2015, the gross debt of GMR Infrastructure stood at Rs.47,738 crore.

Recently, GMR had agreed to divest 51 percent equity in its 99-km highway project in Karnataka to its joint venture partners. In December 2015, the company had raised $300 million from Kuwait Investment Authority by allotting 60-year foreign currency convertible bonds.

The Dollar Business Bureau - May 10, 2016 12:00 IST