GMR Infrastructure, the Bangalore-based publicly held infrastructure developer, is understood to have set the ball in motion over its stated ‘asset light’ strategy, which the company has been trying to put in place since early this year.
According to preliminary information available, the company is mulling three steps to kick off this process - First, is the total exit from its presence in Canada-based company which has coal mines in South Africa; second, look at merging its stake in two different coal mining companies in Indonesia and then subsequently hold around 35 per cent stake in the merged entity; and also look at diluting its 70 per cent stake in a gas-based power project in Singapore. These steps cumulatively as and when effected may fetch GMR Infrastructure around $500 million.
GMR is under a debt of close to Rs 35,000 crore with a gearing of around 2.5 times and has been looking at various options such as these in addition to offloading its stake in a clutch of highway projects.
Senior management officials told Business Standard that while the process of keenly looking at options to divest stake in the South African mine is in the process, options at how to create value in the Indonesian mines is being studied. An official spokesperson however denied any such moves in the near future.
GMR Infrastructure holds 55 per cent stake in Canada-based Homeland Energy Group which has coal mines in South Africa with reserves of 350 million tonnes. It is understood that GMR is looking at an enterprise valuation of $120 million for this asset. GMR had acquired majority stake in Homeland Energy during 2008, which in addition to coal reserves, is a significant shareholder in Homeland Uranium Inc, a Canadian exploration and development entity for the mineral, focused on projects in Niger and America.
In addition to this asset, GMR Infra has major ownership of two coal mines in Indonesia, for which is has invested close to $600 million. While one has reserves of around 100 million tonnes, another, Golden Energy Mines, has around 900 million tonnes of reserves, for which GMR paid around $450 million for a 30 per cent stake. One of the options which GMR is mulling is to merge these two companies and subsequently hold around 30-35 per cent stake in the merged company.
While these are the options for the mining companies, GMR is also understood to have been getting lot of interest for its 70 per cent in Island Power, a 800 Mw gas-based power project in Singapore. During end of last year, GMR offloaded a 30 per cent stake in favour of Malaysian major – Petronas for around $35 million.
As and when GMR manages to exits these assets, it will follow its earlier major divestment in a global location. Prior to these steps, it had sold off its 50 per cent stake in the US-based power producer Intergen for nearly $900 million. Intergen was operating a clutch of power projects across the world and GMR exited this asset in favour of a Huaneng of China, stating they’d increase focus on India projects.
