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This move by GMR Infrastructure to withdraw the public offer plans of GMR Energy
comes hardly a month after it filed its DRHP with the Securities and Exchange Board of India (SEBI). GMR Energy was seeking to raise Rs 1,450 crore ($242 million), through a fresh issue of shares besides an offer for sale by the private equity investors. Private Equity investors such as Temasek, IDFC Alternatives and Ascent Capital were looking to part exit in the IPO.
GMR Infrastructure holds 100 per cent in GMR Energy technically, while PE investors have invested around Rs 1200 crore in GMR Energy, in the form of compulsorily convertible preference shares (CCPS). CCPs were expected to be converted into shares during the IPO.
The proposed amount was supposed to be used for equity funding in projects such as 1,050 MW (Phase I) Kamalanga Power Plant in Orissa and 1,300 MW Chhattisgarh Power Project and also in repayment and reducing the corporate debt of GMR group. The company has a Rs 24,577-debt burden as of now.
While the company officials declined to specify what will be the changes likely, it is understood that there may be some serious interest for an asset of GMR Energy, which may have led to GMR changing its plans. GMR has been looking at divesting various assets across its airports, power and highways projects as part of its "asset light - asset right" strategy, and according to investment bankers in the know, there may have been heightened interest for an asset of GMR Energy.
GMR Energy, which has so far seen investments to the tune of $4 billion, has been proving to be an Achilles heel for GMR Infrastructure, as two of its gas fired power plants in the Eastern Coast of India have been almost idling due to lack of supply of enough gas to fuel the plants, a result of which, the energy arm has been deep in red. However, GMR has started to generate power from its coal-fired power plants due to which there is likely to be a turnaround in its performance during the current financial year.
Highlights for GMR Energy
* GMR, which is bleeding heavily due to idle assets in the power sector, is however betting heavily on this vertical which has seen investments close to $4 billion
* For the 9-month period ending December 31, 2013, GMR Energy lost Rs 1,000 crore on revenues of Rs 2303 crore, as two of its gas-fired plants are almost idle
* Has 15 power generation assets of which 8 are operational and 7 are under various stages of development
* Has 4.8GW capacity of which close to 2.5GW is operational (823MW gas based and 1.6GW coal based);
* 2.3GW (1.4GW coal based, 768 MW gas based, 180MW hydro power based) capacity is under construction.
* GMR had raised Rs 1400 crore in 2010 in GMR Energy through a PE consortium comprising IDFC and Temasek, among others.
* These investors were to be provided an exit within three years through an IPO of GEL.
* Recently, GMR renegotiated the deal by allotting Rs 1134 crore worth of compulsorily convertible preference shares in the listed company and an equivalent worth of shares in GMR Energy.
* During March 2014, files RHP for a public offer. The IPO proceeds was to be primarily utilised towards Rs 700 crore equity infusion in Kamalanga and Chhattisgarh power projects and for
repayment of debt;
* In addition, it would have provided an exit route to existing Private Equity investors
* April 2014 Withdraws IPO plans
