Korean Western Power Co (KOWEPO), a subsidiary of South Korea's $38.7 billion power giant KEPCO, has picked up 22.7% stake in Pioneer Gas Power Ltd for an undisclosed sum.
Pioneer Gas Power (PGPL), part of the Hyderabad-based Pioneer Group promoted by K Sudhir Rao and K Suhan Rao, is setting up a 388 MW gas-based power plant in Raigad, Maharashtra.
KOWEPO has plans to hike its stake up to 40%. The project is expected to cost $250 million and will be operational by end of 2013, a company statement said here.
Lodha Capital Markets acted as the sole advisor to Pioneer Gas for this transaction.
KEPCO, the largest electric utility in South Korea, is responsible for almost 90% of South Korea's electricity generation. Its subsidiary KOWEPO is engaged in the business of producing electricity and operates thermal power stations and combined cycle power plants.
"We were keen to enter in India given that the country is facing a large energy deficit and the energy requirement is expected to grow at 8-10% per annum over the next 5 years. We were impressed with the progress on PGPL's upcoming 388 MW power project," KOWEPO director Bong Geun Kim said.
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He added that financial closure is done with a consortium of 9 banks with IFCI being the lead institution.
PGPL's capex being one of the lowest during current times for a gas-fired power plant is a new benchmark in itself, Kim said.
"With KOWEPO as a partner, we will stand to gain significantly from their knowledge and expertise," Pioneer Gas Power Managing Director Suhan Rao said.